The Department of Justice announced a sprawling operation seeking to end an elaborate student aid fraud scheme that authorities say has bilked hundreds of millions of dollars from taxpayers.
The effort, dubbed “Operation Ghostbusters,” aims to crack down on an international fraud scam that has flowed federal student aid into offshore accounts since at least 2021.
At an Oct. 29 news conference, Assistant Attorney General Colin McDonald described the scheme, detailing how suspects steal Americans’ identities before applying to universities, receiving federal student aid and running off with the money.
McDonald said perpetrators are increasingly using use artificial intelligence to create so-called “ghost students,” filling out college applications
and even completing coursework to keep the aid dollars flowing.
Some fraudsters go as far as creating “the appearance of a fake student in an online classroom to trick schools into believing a real person is present,” he said.
“These are not isolated errors. This is organized fraud at scale,” said McDonald, adding that the scheme has led to an estimated “several hundred million dollars lost.” In California, one-third of community college applications submitted in 2024 were reportedly flagged as fraudulent, McDonald said.
The government’s expansive investigation involves multiple federal agencies, including 26 FBI field offices and more than 20 U.S. attorney’s offices, according to the DOJ. There are at least 40 open cases related to the scam.
McDonald said the operation, which began in April, has so far led to charges against five people and the seizure of more than $750,000 in crypto currency tied to networks in Kenya. The defendants have been indicted in multiple states, including Nebraska and New Jersey.
McDonald said the first round of charges is “just the beginning."
“If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build their future, we are resolved to find you and prosecute you," he said.
This article originally appeared on USA TODAY: 'Operation Ghostbusters': DOJ unveils crackdown on student aid fraud scheme
