Five Arrested in First U.S. Crackdown on AI‑Powered ‘Ghost Student’ Loan Fraud

The U.S. Department of Justice has charged five individuals in the first large‑scale federal effort to stop ‘ghost students’—fraudsters who steal the identities of American high‑school graduates and use AI to complete Free Application for Federal Student Aid (FAFSA) forms. The scheme, which targets people who never attended college, allows fraudsters to receive student‑loan disbursements that are then funneled into bank accounts and cryptocurrency wallets. The DOJ seized more than $750,000 in crypto linked to a network associated with Kenyan nationals and identified over 830,000 potentially fraudulent federal aid accounts, with estimated losses approaching $130 million. Assistant Attorney General Colin McDonald said the crackdown is just beginning and warned that fraudsters anywhere in the world will be pursued.