The Justice Department’s Dangerously Weak Case Against Letitia James

Earlier this week, the Justice Department seemed poised to pursue an indictment against New York Attorney General Letitia James on pathetically weak charges. Yet the charges that actually ended up in the indictment a jury returned on Thursday may somehow be even weaker.

U.S. Attorney for the Eastern District of Virginia Lindsey Halligan—President Trump’s handpicked replacement for Erik S. Siebert after he concluded there wasn’t sufficient evidence to charge either James or former FBI Director James Comey—presented evidence to grand jurors herself in the case. That’s unusual, and not only because Halligan is an insurance lawyer with no prosecutorial experience; career staff would typically do the job of presenting, but in this case as in Comey’s, they balked. In fact, Halligan reportedly didn’t even inform Attorney General Pam Bondi or the main Justice Department the indictment was coming.

No wonder.

The criminal referral that Federal Housing Finance Agency Director Bill Pulte sent to the Justice Department in the spring alleged that James might have violated the wire fraud statute (18 U.S.C. § 1343), the mail fraud statute (8 U.S.C. § 1341), the bank fraud law (18 U.S.C. § 1344), and a law against false statements to a financial institution (18 U.S.C. § 1014) when she applied for mortgages in Virginia and New York.

A property James purchased in 2023 in Norfolk, Va., was expected to be at the center of any case to come out of the Eastern District—on the grounds that she misrepresented the home as her primary residence to secure a better rate when applying for a loan, when really she lived, as required by law given her position as attorney general, in New York. This argument was terribly strained. In reality, the home was a primary residence: for James’s niece, whom the attorney general was helping out by co-signing on the mortgage.

Perhaps recognizing the questionable quality of this case, prosecutors have settled on another altogether. The indictment they’ve secured involves a Norfolk property, yes, but one purchased in 2020 rather than 2023. The Justice Department alleges that James described this property as a “second home” rather than the investment property it really was—and that by doing so, she managed to avoid an 0.815 percent higher rate and emerge with “ill-gotten gains” of $18,933 over the life of the loan.

Meet the New Case (Worse than the Old Case?)

Prosecutors are still charging James with bank fraud and false statements to a financial institution, both of which have a statute of limitations of 10 years. To win a conviction, they’ll have to prove that James knowingly made a false statement that was intended to deceive as well as either intended, or tending, to influence the decision of a bank.

The indictment asserts that James financed her purchase of a three-bedroom, one-bathroom property in Norfolk with a loan involving a “Second Home Rider”—a document attached to second-home mortgages that restricts the borrower’s ability to rent the property out. “Despite these representations,” prosecutors say, the property “was not occupied or used by James as a secondary residence and was instead used as a rental investment property.” They note that she filled out Schedule E tax forms indicating she received rental income from the property, and reported zero “personal use” days.

Ahead of the indictment, ABC reported that prosecutors were considering a case exactly like this—but that senior Justice Department leadership wasn’t confident they’d be able to prove the charges beyond a reasonable doubt. The Fannie Mae guidelines on the issue, they worried, were too squishy. And squishy they are: They yield, at least as applied to the Letitia James case, under the gentlest of scrutiny.

Sam Antar, the convicted felon and former certified public accountant who carried out a massive securities scam in the 1980s and has now transformed himself into a muckracking “fraud expert,” surfaced many of the documents now at the center of the James investigation. The trove of information appears to include the mortgage papers at issue in the indictment, including  the James-signed second-home rider, whose language matches the Fannie Mae standard.

The rider bars James from entering into “a timesharing or any 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”—just as the indictment explains it does. But prosecutors don’t even bother to allege she ever entered into such an arrangement. All they allege is that she rented out the property, and that she didn’t personally use it.

That behavior, the rider doesn’t prohibit. On the contrary, it explicitly allows short-term renting during the first year according to certain conditions. One of those conditions does concern occupancy: The home must be “available primarily as a residence for [her] personal use”—but only available. James need not actually have used it. After the first year, renting is even fairer game. Regulators deliberately rewrote the standard rider in 2019 to make renting easier for second-home owners.

Exactly how James used, or didn’t use, the property remains to be seen. The evidence so far appears almost laughably flimsy: The Schedule E forms the indictment references aren’t publicly available, but James provided Antar’s trawled up financial disclosures to the state of New York, and she only notes having received rental income from the Norfolk property in one year, 2020. The amount? $1,000 to $5,000. The indictment’s otherwise odd wording around the “thousand(s) of dollars in rents received” that James recorded on her taxes suggests the amount indicated therein is similar or the same—and consistent with a short-term rental.

If At First You Don’t Succeed

Even proving that James made a false statement to a bank seems like a tall task, given it’s unclear she violated the guidelines for second homes. Proving that she intended to deceive the bank—that she had a firm belief those squishy rules forbade her behavior, and so concealed her intentions from her lender—is a more difficult endeavor still. 

That doesn’t matter to President Trump’s indefatigable team of loyal lawyers. The case against James for which the Justice Department received a criminal referral didn’t appear strong enough, so Weaponization Working Group Director and Special Attorney for Mortgage Fraud Ed Martin seems to have gone searching for a stronger one. This one ended up too weak for career prosecutors to feel comfortable with it either, so Lindsey Halligan went ahead and took it to a grand jury on her own.

If she fails in court, perhaps there’s a tiny box on an inconsequential form somewhere else that Letitia James forgot to tick. Or maybe now it’s Adam Schiff’s turn instead. Halligan said in her statement accompanying the indictment that the charges represent “tremendous breaches of the public’s trust.” That’s true—just not in the way she meant it.