The U.S. Department of Justice (DOJ) has launched a formal criminal investigation into New York Attorney General Letitia James, according to multiple published news reports.
The probe, which became public Thursday, May 8, follows an April referral from Federal Housing Finance Agency (FHFA) Director William Pulte, who cited alleged mortgage application fraud involving James’ properties in Norfolk, Virginia and Brooklyn, New York.
Key Allegations In FHFA Letter
- Virginia Property: James is accused of falsely claiming a Norfolk, Virginia home as her primary residence in 2023 to secure better mortgage rates, despite her official residence being in New York. A power-of-attorney document signed by James granted her niece authority to execute the purchase, listing the property as James’s principal residence.
- Brooklyn Property: FHFA alleged that James misrepresented a five-unit Brooklyn brownstone as a four-unit property to qualify for a loan intended for smaller multifamily homes, and claimed this happened multiple times dating back to the early 2000s. That misrepresentation could have gained her access more favorable loan terms, according to FHFA.
- Mortgage Document: An additional claim involves a 1983 mortgage document where James and her father allegedly signed as husband and wife, potentially to meet lending requirements. The two also listed themselves as married in documentation 17 years later in May 2000, FHFA alleged.
Legal Implications
Now it all depends where the DOJ’s investigation leads. If substantiated, these allegations could lead to charges such as wire fraud, mail fraud, bank fraud, and making false statements to financial institutions, according to multiple news outlets. Each of those federal offenses carries significant penalties, including large fines and potential imprisonment.
Wire fraud and bank fraud charges, for example, each carry potential sentences of up to 30 years in federal prison if the fraud affects a financial institution.
Defense And Political Context
James’s attorney, Abbe Lowell, has dismissed the allegations as politically motivated, labeling them as “baseless” and “long-discredited,” according to NBC New York. He contends that any errors on mortgage docs were clerical and lacked intent to defraud.
The attorney reportedly has provided documents suggesting that the Virginia property was intended for James’s niece and that the Brooklyn property’s unit count was accurately represented in other filings. Lowell also criticized the FHFA Director’s referral, contending it risks politicizing the role of federal housing regulators.
Meanwhile, the investigation has sparked some political controversy, with critics arguing that it is retaliation by the Trump Administration against James, who led a civil fraud case resulting in a significant judgment against then-former President Trump.
In that case, New York v. Trump, the former President, other individual defendants, and the Trump Organization entities were ordered to pay more than $450 million in total.
Yet More Controversy: NY Budget Provision
In addition, the New York State Legislature has now passed a budget provision allowing state employees, which would include James, to be reimbursed for legal fees incurred due to federal investigations related to their official duties.
Opponents of that measure argued taxpayers shouldn’t have to foot the bill for defending officials facing criminal allegations.
As of this writing, the DOJ, FHFA, and Federal Bureau of Investigation have declined to comment on the investigation, according to multiple published reports. Meanwhile, more developments are expected in the coming weeks, including whether a grand jury will be convened.
