The Justice Department has charged five people in a crackdown on "ghost student" fraud, in which scammers allegedly use stolen identities and AI to enroll fake students in colleges, complete coursework, and collect federal student loan funds. Ars Technica reports: In a press release Thursday, the Department of Justice said it had uncovered a large-scale scheme relying partly on AI. The DOJ seized more than $750,000 in cryptocurrency from "a network associated with Kenyan nationals" after data analysis helped flag likely fraudsters. Assistant Attorney General Colin M. McDonald of the DOJ's National Fraud Enforcement Division credited new fraud-detection measures implemented by the Trump administration for the arrests. He said that "this is the first international seizure of its kind in Kenya," while warning fraudsters that the crackdown has only just begun. [...] At a press conference, McDonald was joined by FBI and Department of Education officials to explain how the scheme works. It starts with bad actors purchasing personally identifiable information (PII) of Americans -- most frequently targeting high school graduates who never attended college and went straight into the workforce. Once they have that sensitive data, they fill out the Free Application for Federal Student Aid (FAFSA) while seeking to enroll in universities and community colleges. If accepted, student aid is distributed first to schools to cover tuition and fees, but any leftover money is deposited into bank accounts controlled by the fraudsters. Dozens of Americans have opened bank accounts to act as money mules for fraudsters, the DOJ said. To keep money flowing, bad actors use AI to fill out applications, complete coursework, and even make it appear that a student is attending virtual sessions. "It looks like the ghost student is actually completing the class," McDonald said at the press conference. "Some even create the appearance of a fake student in an online classroom to trick schools into believing a real person is present. The goal is to keep the ghost student in school for as long as possible, semester after semester after semester." So far, the DOE has "identified over 830,000 potentially fraudulent federal student aid accounts created by using this PII of US citizens," officials said at the press conference. If all those accounts are ghost students, total losses come close to $130 million, the DOJ said.Read more of this story at Slashdot.