US seizes Sh97 million in crypto tied to Kenyan in Sh25 billion student aid fraud

US seizes Sh97 million in crypto tied to Kenyan in Sh25 billion student aid fraud - Kenyan citizen Francis Mogambi was indicted on October 19 on five counts of theft of government money and five counts of aggravated identity theft. (Photo: Handout)

The seizure, conducted with help from Kenyan law enforcement agencies, is the first major international asset seizure since the DoJ established its National Fraud Enforcement Division in April this year.

The United States (US) has seized more than Sh97 million in cryptocurrency linked to a Kenyan national as part of investigations into a transnational student financial aid fraud scheme estimated to have cost American taxpayers more than Sh25 billion.

According to the Department of Justice (DoJ), the seizure, conducted with help from Kenyan law enforcement agencies, is the first major international asset seizure since the Department established its National Fraud Enforcement Division in April this year.

The Division was formally established to investigate and prosecute those who commit fraud against American citizens.

The Department said the seizure was made under Operation Ghostbusters, a nationwide investigation into a large‑scale student‑loan fraud scheme in which criminal actors created fraudulent Federal Student Aid (FAFSA) accounts using stolen US citizen identities to enroll “ghost students” in educational institutions. 

The proceeds were then channeled through bank accounts controlled by US-based money mules before being transferred to overseas accomplices, including individuals in Kenya.

Assistant Attorney General Colin McDonald of the Fraud Enforcement Division said the fraud scheme targeted federal student aid, low-income Americans, and American taxpayers.

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“The Department is charging five defendants and announcing the seizure of more than $750,000 in cryptocurrency tied to this scheme through a network associated with Kenyan nationals. This is the first international seizure of its kind in Kenya. If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build a future, we will find you. Whether you are in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you,” he warned during a press briefing.

In a statement, the Department added that the operation identified multiple Kenyan nationals allegedly involved in the scheme, with some operating through a purported Kenyan safari company.

So far, it has resulted in charges against five defendants across three US federal jurisdictions, with authorities pursuing additional suspects believed to be operating from Kenya.

Meanwhile, in the District of New Jersey, three defendants were arrested over an alleged conspiracy to obtain more than $1 million in federal student aid using fraudulent applications linked to stolen American identities.

Prosecutors allege that the trio received the funds through US bank accounts before transferring the money to co-conspirators in Kenya after retaining a portion of the proceeds.

In Virginia, another Kenyan was charged in an indictment returned by a federal grand jury on October 21 over an alleged conspiracy involving more than $1.4 million in student aid fraud.

According to court documents, the defendant received approximately $1.44 million through more than 700 fraudulent student aid refund deposits and subsequently conducted thousands of financial transactions that moved at least $1.3 million to accounts in the United States and Kenya.

In a separate case in Nebraska, Kenyan citizen Francis Mogambi was indicted on October 19 on five counts of theft of government money and five counts of aggravated identity theft.

Prosecutors allege that between November 2025 and May 2026, Mogambi worked with associates in Kenya to steal American identities, fraudulently enroll victims in educational institutions and divert federal student aid payments.

The indictment alleges that Mogambi retained 30 per cent of the proceeds and sent the remainder to his co-conspirators in Kenya.

“Court documents also reflect that Mogambi attempted to recruit an individual into his scheme and openly shared the details of this brazen conspiracy to steal money from the American people, sharing that he received $2,000 a week and that he needed a business so that he could cash larger checks and not pay taxes,” court papers add.

Mogambi arrived in the US on May 15, 2024, after winning the “Diversity Visa” lottery and a DV1 visa. He was issued a Permanent Resident Card shortly after. He has since been arrested and detained pending trial.

Last month, representatives from the Division and partner agencies visited Kenya to strengthen cooperation on extradition, prosecution, and the recovery of assets allegedly stolen from American taxpayers.

“Through critical assistance and intelligence from Kenyan law enforcement partners, investigators were able to seize over USD750,000 from a cryptocurrency account belonging to a Kenyan national connected to this fraud scheme. This is the first international seizure of its kind in the Fraud Division’s history,” the statement adds.

Authorities have also identified 830,840 potentially fraudulent Federal Student Aid IDs associated with nearly $130 million and recommended that the Department of Education disable them.

The wider investigation has identified more than 40 open cases across 26 FBI field offices and over 20 US Attorney’s Offices.

Investigators believe the fraud has been ongoing since at least 2021, targeting federal financial aid programmes intended to support American students, particularly those from low-income backgrounds.

The scheme involved submitting fraudulent applications using stolen personal information to create so-called “ghost students” who were enrolled in institutions but did not genuinely attend classes.

In some cases, investigators say, fraudsters used artificial intelligence (AI) to complete coursework and maintain the appearance of legitimate student participation, allowing fraudulent aid payments to continue.

The FBI has identified more than $32 million in losses in similar ghost-student schemes, with additional losses suspected. The Justice Department estimates that the wider fraud under investigation exceeds $200 million.

“This stops now. The FBI, working hand-in-hand with our partners at the Department of Education and Department of Justice, will follow all evidence, track every dollar, and pursue each criminal who seeks to exploit our nation’s systems,” said Assistant Director Heith Janke of the FBI’s Criminal Division.

In the meantime, US authorities said Operation Ghostbusters will continue working with Kenyan law enforcement agencies to trace and recover the funds and pursue suspects believed to be operating outside their country.