How Kenyans turned US student aid into a multimillion-dollar fraud racket

A Kenyan man has been indicted in the United States on charges of stealing government funds and aggravated identity theft in a scheme that allegedly defrauded the US student financial aid programme.

On October 19, 2026, a grand jury in Nebraska indicted Francis Mugambi on five counts of theft of government money and aggravated identity theft.

Mugambi arrived in the United States in May 2024 after winning the Diversity Visa lottery, a US government programme that offers people from eligible countries an opportunity to obtain permanent residency.

US prosecutors allege that he ran the scheme between November 2025 and May 2026 by enrolling ghost students in several colleges and universities.

According to the indictment, Mugambi allegedly identified US citizens who had not attended college, stole their personal information, and used their identities to enroll them in higher education institutions.

He then applied for federal student financial aid through the Free Application for Federal Student Aid (FAFSA), a programme administered by the US Department of Education.

Once the applications were approved, the government disbursed funds to cover tuition and other fees. Any remaining money was deposited into bank accounts controlled by Mogambi and his alleged accomplices.

"After tuition and fees are deducted, the leftover federal funds are deposited directly into bank accounts controlled by fraudsters," the White House said in a statement.

"And in a flash, the money vanishes, often overseas to places like Kenya."

Prosecutors told the court that Mugambi retained 30 per cent of the proceeds and wired the remainder to associates in Kenya.

The US government estimates that the scheme involving Mogambi resulted in losses of about Sh2.5 million ($20,000). Prosecutors also allege that he attempted to recruit more people to help defraud the government.

The investigation that led to his indictment was part of a wider crackdown dubbed ‘Operation Ghostbusters,’ through which US authorities estimate that the student aid fraud schemes have cost the government approximately Sh376 million ($2.9 million).

Mugambi's case is linked to a wider investigation that has also seen two other suspects arrested over allegations that they obtained more than Sh130 million ($1 million) and transferred the proceeds to Kenya through a purported safari company.

The US Department of Justice further alleges that the scheme ran from March 2021 to January 2026, potentially costing the government about Sh195 million ($1.5 million).

Kenyan suspects linked to the wider operation could also face prosecution as investigators continue to pursue the case.

Assistant US Attorney General Colin McDonald described the schemes as organised fraud on a large scale.

McDonald heads the Justice Department's National Fraud Enforcement Division, which conducted the investigation alongside the Federal Bureau of Investigation, the Department of Education and other US law enforcement agencies, working with Kenyan authorities.

The Kenyan agencies involved in unearthing the details include the Directorate of Criminal Investigations, the Assets Recovery Agency, the Kenya Revenue Authority and the Financial Reporting Centre. The Office of the Director of Public Prosecutions is handling the extradition-related legal processes.

In yet another case, two Kenyans are among five people charged in three related cases involving alleged student aid fraud in Virginia, Nebraska and New Jersey.

The White House on Thursday evening identified the two Kenyans as suspects in a scheme to fraudulently obtain student financial aid for personal gain and to benefit co-conspirators overseas.

The two are accused of wiring more than Sh129 million ($1 million) to associates in Kenya. They were charged in cases filed in Virginia and Nebraska, while three other suspects face charges in New Jersey.

Prosecutors also announced that two additional suspects based in Kenya, who allegedly worked with the New Jersey-based co-conspirators, would face prosecution.

In one of the cases, a Kenyan suspect allegedly received more than Sh186 million ($1.44 million) through about 700 student aid refund deposits made into multiple bank accounts.

The funds were subsequently transferred to various accounts in the United States and Kenya, with the transactions totalling approximately Sh168 million ($1.3 million).

The Justice Department also seized about Sh97 million ($750,000) in cryptocurrency from an account belonging to a Kenyan national suspected of being connected to the scheme.

The US Embassy in Kenya said investigations were ongoing, warning that authorities would continue pursuing those involved in defrauding American taxpayers. "The United States is deeply grateful for the assistance and professionalism of Kenyan law enforcement and prosecutors," the embassy said Friday.