The DOJ has charged five people and seized more than $750,000 worth of cryptocurrency as part of a crackdown on the AI-driven epidemic of “spiritual students.”
Student loan fraud is nothing new. But AI and the post-pandemic pivot to online courses appear to have worsened the problem in recent years, allowing fake students to submit AI-generated courses and applications. In 2025, Voice of San Diego reported that a professor at a community college in Chula Vista, California, turned the 104 students enrolled in her two online courses down to just 15 real people.
Operation Ghostbusters is an ongoing federal investigation into student loan fraud where perpetrators allegedly created Federal Student Aid (FSA) ID accounts using stolen US citizen identities to enroll ghost students in higher education.
The fraudsters would then divert the loan and spend money in bank accounts controlled by foreign actors with the help of US-based “money mules”, including Kenyan nationals. One of the schemes, in New Jersey, began in March 2021, continued through at least January 2026, and defrauded the Department of Education to receive more than $1 million in FSA funds.
Four of the accused have been arrested, including three in New Jersey. The DOJ will also seek to charge two co-conspirators in Kenya who are linked to an “alleged Kenyan safari company.”
The DOJ estimates the total scale of fraud at well over $200 million, and says there are now more than 40 open cases, with references to 26 FBI field offices and more than 20 US Attorneys’ Offices.
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“This is the first international seizure of its kind in Kenya,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division.
He added: “If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build a future – we’ll find you. Whether you’re in Nebraska, New Jersey, Virginia or Nairobi, we’ll track you down.”
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