Appraising the Federal Indictment of Letitia James – FactCheck.org

The legal clashes between New York Attorney General Letitia James and President Donald Trump took a U-turn with a federal indictment on Oct. 9 charging James with mortgage fraud. The government says when James bought a house in Norfolk, Virginia, she told the mortgage broker it would be a second home in order to get a lower interest rate, but she then used it as a rental property.

James called the charges in the indictment “baseless.” News reports say the house was purchased for her great-niece who lived in the home rent-free, though James has listed a few thousand dollars in income from the property.

Legal experts have questioned the merits of the indictment. “In my experience, federal prosecutors would not have seriously pursued something this minor,” James Kainen, a professor with expertise in real estate and white collar crime at Fordham University School of Law, told us in an email. “The indictment is disproportionate and inconsistent with established prosecutorial norms.”

Here, we’ll look at the allegations and facts surrounding the case, the history of animosity between Trump and James, and what experts say about the weight of the charges.

The case was brought by the U.S. attorney for the Eastern District of Virginia amid pressure from Trump to pursue his longtime political adversaries. In a Sept. 20 post on Truth Social, apparently addressed to Attorney General Pam Bondi, Trump cited social media posts calling for the prosecution of former FBI Director James Comey, Sen. Adam Schiff and James. “They’re all guilty as hell,” Trump’s post said, adding, “JUSTICE MUST BE SERVED, NOW!!!” (Comey was indicted Sept. 25 on charges of lying to Congress.)

James is scheduled for an initial court appearance on Oct. 24 on charges of bank fraud and making false statements to a financial institution. A press release from the U.S. Attorney’s Office for the Eastern District of Virginia said James “faces penalties including up to 30 years in prison per count, up to a $1 million fine on each count, and forfeiture.” The release also noted, “Actual sentences for federal crimes are typically less than the maximum penalties.”

The Indictment

The case against James was brought by Lindsey Halligan, a former personal lawyer for Trump who was appointed interim U.S. attorney for the Eastern District of Virginia in September after her predecessor, Erik Seibert, was pushed out of the position for failing to file charges against James after five months of investigation, according to an ABC News report that cited anonymous sources. Halligan had advised Trump following the FBI seizure of classified documents at Mar-a-Lago in 2022 and has worked as a White House special assistant, but she has no experience as a prosecutor.

The five-page indictment filed against James on Oct. 9 alleges she attempted to “defraud” two financial institutions, OVM Financial, the mortgage broker, and First Savings Bank, when she purchased a three-bedroom house in Norfolk for $137,000 in August 2020, financed with a mortgage loan of about $109,600.

The loan required that James use the property as her “secondary residence” and “prohibited its use as a timesharing or other shared ownership arrangement or agreement that requires her either to rent the property or give any other person any control over the occupancy or use of the property,” the indictment says.

“Despite these representations,” the indictment continues, the property “was not occupied by James as a secondary residence and was instead used as a rental investment property, renting the property to a family of (3).”

“This misrepresentation allowed James to obtain favorable loan terms not available for investment properties,” including an interest rate of 3% instead of 3.8% and resulting in “total ill-gotten gains of approximately $18,933 over the life of the loan,” according to the indictment.

The indictment charges James with one count of “bank fraud” and one count of “false statements to a financial institution.”

According to reporting by the New York Times, the house in Norfolk was purchased by James for her great-niece, Nakia Thompson, and Thompson’s children. Thompson testified in June to a grand jury — not the one in Alexandria, Virginia, which charged James — that Thompson had “lived in the house for years and that she did not pay rent,” the Times reported.

“Under the terms of a document that amended Ms. James’s mortgage agreement, she was expected to use the Norfolk property as a second home, with the exception of occasional, short-term rentals, according to the documents and to real-estate experts who analyzed” the documents, the Times also reported.

The indictment says “James filed Schedule E tax form(s),” treating the property as “rental real estate” and reporting “thousand(s) of dollars in rents received.”

James reported on annual financial disclosure statements filed in New York state in 2020 that she had made $1,000 to $5,000 in income on the “investment real property” in Norfolk, but did not report income on that property in other years. She listed the single-family house in Norfolk as an “investment” valued at $100,000 to $150,000 on the financial disclosure statements for the years 2020, 2021, 2022 and 2023. On her 2024 disclosure statement, James listed the the Virginia house as “real property.”

The day after the indictment was announced, James’ lawyer, Abbe Lowell, issued a statement saying, “We are deeply concerned that this case is driven by President Trump’s desire for revenge. When a President can publicly direct charges to be filed against someone — when it was reported that career attorneys concluded none were warranted — it marks a serious attack on the rule of law.”

James released her own statement and posted a video on X on the day of the indictment, saying, “These charges are baseless, and the president’s own public statements make clear that his only goal is political retribution at any cost.”

We reached out to Lowell’s office for comment on the financial disclosure forms that show James had received some income from the Norfolk home and described it as an investment property, but we did not receive a response.

A History of Political and Legal Conflict

The hostility between James and Trump dates back to 2018 when she ran for attorney general on a promise to prosecute Trump for “defrauding Americans” and referred to him as an “illegitimate president.” Trump lambasted what he called James’ “GET TRUMP agenda.”

James’ investigation of Trump eventually led to his conviction in a 2024 civil fraud case. He was found guilty of deceiving banks and insurers for years by misrepresenting his wealth on financial statements he used to secure loans. The court fined Trump $450 million in penalties and barred him for three years from serving as the executive of the Trump Organization or any New York company. 

During that trial, Trump used his social media platform to claim, in part, “The only Fraud was committed by A.G. Letitia James … She should be prosecuted!”

The staggering fine against Trump was tossed out by a New York appeals court in August, though the fraud charge was upheld.

Allegations against James surfaced in April, when William Pulte, director of the Federal Housing Finance Agency and a Trump ally and donor, sent a letter to Bondi accusing James of mortgage fraud in Virginia and New York. James has not been charged in the real estate dealings referred to the Justice Department by Pulte, however. The Norfolk house at issue in the indictment was not cited in Pulte’s letter.

As we said, after the U.S. attorney for the Eastern District of Virginia didn’t pursue any charges against James, he was replaced by Halligan.

Merits of the Case

The strength of the mortgage fraud case brought against James has been questioned by legal experts.

Paul Schiff Berman, a law professor at the George Washington University School of Law, told the Associated Press, “It is very uncommon for prosecutors to bring these sorts of claims absent a pattern of malicious activity or evidence that the individual has actually harmed the bank by not paying their mortgage or if it’s part of a much larger fraudulent scheme.”

In James’ case, “the claim is that she said that the house was going to be used as her second home but she also used it as a rental property sometimes,” Berman said, adding that could be a use for a second home that doesn’t violate a mortgage contract.

Kainen, the Fordham law professor, told us, “The claimed mortgage fraud alleges a maximum savings to Ms. James” of about $18,933 “and no loss to the bank. … By comparison, prosecutors overlooked potential mortgage fraud cases involving applicants who lied about thousands of dollars in income and then defaulted on hundreds of thousands of dollars of debt during the Great Recession.”

The James case “is hardly an investigation that would have resulted in an indictment for two federal felonies,” Kainen said. “Winning this case at trial requires proof beyond a reasonable doubt that Ms. James had, in the words of the indictment, ‘no intention to make personal use of the property’ when she applied for the loan. If she changed her mind, thought she might use it, or even had any reason to spend time in Virginia, it would be difficult to convict her. Responsible prosecutors do not spend their time on minor cases that are hard to win.”

The indictment “does not appear to be an attempt to enforce the law with integrity,” Kainen also said. He said that strengthens James’ argument to have the case dismissed due to “selective prosecution,” which refers to prosecution for arbitrary reasons, such as political motivation.

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