Federal officials say criminals used stolen personal information and artificial intelligence to create “ghost students” who applied for federal student aid, completed coursework, and appeared to participate in virtual classes. The alleged scheme has affected more than 830,000 potentially fraudulent aid accounts and caused at least $32 million in identified losses, with officials warning that the actual total is likely much higher.
“It appears that the ghost students are actually finishing their classes,” McDonald said at a press conference. “Some people create fake student figures in online classrooms to trick people into believing there are real people in the school. The goal is to keep the ghost students in school for as long as possible each semester.”
Stolen identities left Americans facing potential debts
The Department of Education has “identified more than 830,000 potentially fraudulent federal student aid accounts that were created using the PII of U.S. citizens,” officials said at the press conference. If all of those accounts belonged to ghost students, the total loss would be nearly $130 million, according to the Justice Department.
People whose personal information was stolen may have little chance of learning about the fraud until the government attempts to collect the loans years later. In the meantime, their credit and financial credibility could be damaged. Once victims discover the scheme, they would be shielded from demands to repay the resulting student loans, although MacDonald acknowledged that the situation was troubling.
“The Department of Education is doing a great job of unraveling this mess, which no one should have to endure,” he said.
In connection with the arrests, officials said they had “identified actual losses associated with these specific targets in excess of $32 million.” They added, “we believe the actual total is significantly higher” and that “millions more are suspects.”
Investigators traced aid to banks and cryptocurrency wallets
The Department of Education’s Office of Inspector General first detected a pattern of fraud that brought the alleged scheme to light. The FBI then determined the number of affected accounts and traced funds transferred to US and foreign bank accounts, as well as cryptocurrency wallets.
In one case, the Justice Department said the defendants “used multiple bank accounts at multiple financial institutions to receive more than 700 fraudulently obtained federal student aid refunds totaling approximately $1,439,548.” In another, “an individual received more than $1 million in deposits tied to more than 300 fraudulent student accounts,” Inside Higher Ed reported.
Source: arstechnica.com
