James Facing Up To 60 Years In Prison In Mortgage Fraud Case
New York Attorney General Letitia James, a Democrat known for her politically motivated crusades against President Donald J. Trump, is now facing her own legal reckoning. Federal prosecutors have indicted James on bank fraud and false statement charges, alleging she lied on a mortgage application to secure favorable loan terms for a Virginia property she later used as a rental investment.
A federal grand jury returned the indictment Thursday, centering on a single-family home in Norfolk, Virginia, purchased by James in August 2020 for approximately $137,000. Prosecutors say most of the purchase was financed through a $109,600 mortgage that explicitly forbade rental or investment use.
By falsely claiming the home was a “second residence,” James allegedly received a lower interest rate and saved nearly $19,000 over the life of the loan.
The investigation began after Federal Housing Finance Agency Director William Pulte referred the case to the Department of Justice, which launched a criminal probe earlier this year.
According to The New York Post, James’ own financial disclosure forms showed that she listed the Norfolk property as an “investment” from 2020 through 2023, despite the loan’s terms. Only in 2024 — shortly after the FHFA referral — did she reclassify it as “real property.”
“The indicted attorney general also estimated the value of the property anywhere between $150,000 and $200,000,” The Post reported.
Federal prosecutors allege that James not only violated the terms of her mortgage but also failed to report thousands of dollars in rental income across multiple disclosure forms.
In her 2020 disclosure, James listed “investment real property” in Norfolk that generated between $1,000 and $5,000 in revenue — though prosecutors said it was unclear whether this referred to the same house named in the indictment.
The indictment cites a “Second Home Rider” attached to her loan agreement, requiring James to occupy the home as her secondary residence and prohibiting any rental or shared ownership.
“Despite these representations,” prosecutors wrote, “the Norfolk property was not occupied or used by James as a secondary residence and was instead used as a rental investment property.”
Federal filings further accuse James of lying on her homeowners’ insurance application, claiming the property would be “owner-occupied,” while reporting rental income on her federal tax returns, identifying the house as “rental real estate.”
If convicted of bank fraud and making false statements to a financial institution, James faces up to 60 years in prison and $2 million in fines.
The legal drama escalated Friday when U.S. District Judge Jamar Walker, an appointee of President Biden, denied a defense motion from James’ attorney Abbe Lowell, who sought to compel prosecutors to maintain a log of all media communications following reports of encrypted Signal messages between prosecutors and journalists.
Lowell’s filing cited a report claiming U.S. Attorney Lindsey Halligan had exchanged auto-deleting messages with Lawfare senior editor Anna Bower about the case.
Judge Walker called the exchanges “unusual” but declined to deem them improper:
“[T]he defendant does not demonstrate that it is necessary for the Court to order the government to track communications with the media in any particular form,” Walker wrote in his six-page ruling.
“The defendant’s request that the government be required to keep a communication log is DENIED.”
The New York Post reported that Halligan’s messages were configured to disappear automatically after eight hours, raising further questions about transparency within the Biden Justice Department.
The judge did not comment on whether those communications could fall under discovery obligations, especially given reports that James’ grandniece testified she never paid rent on the Virginia home central to the case.
Letitia James, who pleaded not guilty last week, is now the latest high-profile Democrat to face criminal prosecution after years of weaponizing her office against political opponents — most notably her ongoing civil pursuit of President Trump’s family business.