Letitia James Could Face 'Jail Time' Over Fraud Allegations - Newsweek
By: Kate Plummer (Newsweek)
Yikes! This can't be good news for Ms. James. But she was always right, "Nobody is above the law!"
S E E D E D C O N T E N T
New York Attorney General Letitia James could face "jail time" after being accused of mortgage fraud, an academic has said.
James, a Democrat who has served as New York's attorney general since 2019, was this week referred to U.S. Attorney General Pam Bondi and Deputy Attorney General Todd Blanche by the Federal Housing Finance Agency (FHFA). Its director, William J. Pulte, alleged in a letter that James falsified records to obtain a mortgage.
According to Pulte, James said on a mortgage application in 2023 that a house in Norfolk, Virginia, was her primary address, despite her position requiring New York residency.
The 1,450-square-foot single-family home in Norfolk was built in 1947 and has three bedrooms and one bathroom, per the deed. It was purchased for $240,000, with a $219,780 mortgage.
New York Attorney General Letitia James outside the courthouse during Donald Trump's New York civil fraud trial in New York on October 18, 2023. New York Attorney General Letitia James outside the courthouse during Donald Trump's New York civil fraud trial in New York on October 18, 2023. AP Photo/Ted Shaffrey
Pulte also said that in 2021, the New York attorney general falsely stated the number of units in a Brooklyn property she owned—saying it had four units, not five. He added that James purchased another property with her father as co-signer but listed them as husband and wife in 1983 and 2000.
Pulte alleged wire fraud, mail fraud, bank fraud and false statements to a financial institution.
While James has not been formally charged and has denied all wrongdoing, legal experts have suggested that she will be prosecuted, with one suggesting she could see jail time.
A spokesperson for the Office of the Attorney General told Newsweek : "Attorney General James is focused every single day on protecting New Yorkers, especially as this Administration weaponizes the federal government against the rule of law and the Constitution. She will not be intimidated by bullies—no matter who they are."
Speaking with Newsweek , Kyle Welch, an associate professor at George Washington University's School of Business who specializes in financial fraud, said the allegations about James could "carry jail time" and disbarment.
James gained national attention last year after suing Trump on charges of falsely inflating the value of his property. A New York judge ordered Trump to pay $454 million in the civil fraud judgment.
"The irony here is almost too on-the-nose," Welch said. "Letitia James built her 'nobody is above the law' brand by prosecuting Trump for inflating his financial condition—statements that came with disclaimers, involved banks that said they weren't harmed, and still resulted in a half-billion-dollar fraud conviction."
He continued: "Was Trump's case a 100 percent political prosecution? Yes. Now James is under scrutiny for allegedly misrepresenting her own finances to get a mortgage. No disclaimers. No ambiguity. Is this case also 100 percent political? Yes. Would either case have been brought against a nonpolitical civilian? Probably not. And that's the bigger problem for all of us.
"James and her defenders can't seem to see the carbon-copy nature of these cases. And unfortunately, New York Democrats and the DNC helped normalize this tit-for-tat legal targeting under the banner of 'accountability.' Well, the shoe's on the other foot now—and Trump's team is playing the exact same game.
"Here's where it gets surreal: Both cases involve felony-level allegations. Both could carry jail time. A conviction would likely mean disbarment for James. Will James, like Trump, turn this prosecution into a political asset?"
Former assistant U.S. Attorney Gene Rossi told Newsweek that the referral was likely to "be taken very seriously" and that if the allegations were true, they wouldn't be difficult to prove.
"People in glass houses should never throw stones," he said. "And for politicians, this adage can be deadly. Attorney General James faces mortgage fraud allegations that make the civil trial stones thrown at President Trump look conniving and hypocritical. If the allegations are true, the elements of her purported crime are not hard to prove. The issue for me is whether she is the victim of vindictive or selective prosecution; however, the irony of her defense would not be lost on the public. Nonetheless, under this Justice Department, the referral will be taken very seriously."
Matthew Mangino, a former district attorney in Lawrence County, Pennsylvania, added that James would be prosecuted and that it would "have a chilling effect on opposition" to Trump.
"The attorney general of one of the largest states in the nation should not, if the allegations are true, be fudging the books to qualify for better borrowing rates, especially not one investigating the President of United States," he told Newsweek .
"But let me be clear—this a warning from the Trump administration: 'We are watching. Come after the President, and we are going to exact revenge.' The message is clear—if you're going to challenge Trump, you better be ready for the wrath of the United States government," Mangino continued.
He added, "This referral and 'inevitable' prosecution will have a chilling effect on opposition to President Trump, and that is exactly what it is intended to do."
Lawyer Norman Eisen, who served as the ambassador to the Czech Republic during the Obama administration, disagreed that a court would proceed on the allegations mentioned.
"This is more Trump administration weaponization, like his executive orders last week demanding investigations of officials from his first administration who had the temerity to criticize him," he told Newsweek .
Eisen continued: "The stale allegations here are blatant tit-for-tat and should not be dignified as if they were genuine issues. No court is going to proceed on allegations from 1983, for example. The AG has said she will not be bullied or deterred from her work by this retaliation. Good for her. Every American should reject the president's and his cronies' illegitimate use of government power to attack his enemies."
Bondi said on Wednesday that the Department of Justice was reviewing documents scrutinizing James' residence.
Kate Plummer is a Newsweek reporter based in London, U.K. Her focus is on U.S. politics and national affairs, and she is particularly interested in the impact of social policy decisions on people as well as the finances of political campaigns, corruption, foreign policy, democratic processes and more. Prior to joining Newsweek, she covered U.K. politics extensively. Kate joined Newsweek in 2023 from The Independent and has also been published in multiple publications including The Times and the Daily Mail . She has a B.A. in History from the University of Oxford and an M.A. in Magazine Journalism from City, University of London.
Languages: English.
You can get in touch with Kate by emailing k.plummer@newsweek.com, or by following her on X at @kateeplummer.
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Y'all be cool now, ya hear?
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There are documents proving the allegations made. I have seen them in other articles like THIS one . Trump's revenge? Perhaps. But if she really did those things, and it looks like she did, then she will have to face the music and hold herself to her mantra that, "Nobody is above the law."
Given I think I have a rather good understanding of how you think, I see your comment as rational and fair.
Others, who called Trump's case a witch hunt and deemed the charges to be nit-picking and legal technicalities will likely find this to be perfectly reasonable for James. It would be something if those in question were to claim that this is also 'lawfare'.
Funny how that works, eh?
Indeed....funny...
As I said, she was right..."Nobody is above the law!" Not Trump and not her.
Do you buy her response so far that the allegations are "baseless"? I think the evidence has been established and provided so it certainly can't be called "baseless". She has a lot more 'splaining to do. Hypocrisy grinds my gears, I think you know that about me.
I have not looked at the evidence but this certainly seems easy to adjudicate.
If she committed fraud then she should pay the price.
Live by the sword, die by the sword.
Of course it's lawfare. There are probably thousands upon thousands of people who have done exactly the same sort of thing and nobody really cares. The banks only care if they don't get paid. The only reason Trump ended up in court over the real estate deal is because he's Trump and it was a political hit job. Jame's current pickle is also lawfare. The difference is that what Trump did was just business as usual in the real estate world. James went after him on political grounds while knowing she is guilty of the same sort of fraud, assuming she's guilty. She dug her own grave.
That is a consistent and defensible position. While both did break the law, in both cases there are clearly political forces at play.
This, however, seems one-sided. Seems both engaged in a "common" misrepresentation.
One difference that likely will hold true is that Trump's fraud was a pattern of behavior over decades while James' might just be this one incident.
Its like Christmas for extreme MAGAs. Now, perhaps, they can say with a straight face that they were "right" all along. The evil black woman persecuting their hero turns out to be no better, no, make that worse, than Trump is.
Its all nonsense but now they have a better excuse for supporting the piece of shit than they had yesterday.
Come on now John, you know it's spelled "prosecuting".
And the racist bit was un-called for as there are millions of people of all races and creeds wanting to take Trump down for many reasons, shame on you for going down that road!
Who the hell is suggesting that? The case of fraud perpetrated by Trump is magnitudes greater than that alleged to have been perpetrated by Ms. James. But does that mean that anyone should be allowed to get away with fraud of any magnitude? Nobody said anything about evil, we are talking about fraud here. Illegal but not evil. Let's agree not to exaggerate in an effort to start a fight.
OK, I'll bite, what is " all nonsense " JR? If anyone uses this as a better excuse to support " the piece of shit ", then they have missed the point, just as you have with your " nonsense ", speculating about what is "Christmas" for people with whom you don't even associate.
Sure. From day one Trump supporters have attacked Leticia James, long before these allegations about her were even a murmur. She was attacked as a black person who had it out for Trump. If you dont think there are MAGAs who are very happy this black bitch is going to get hers now , then maybe you havent been paying enough attention.
I dont care whether or not James is guilty or innocent. If she is guilty let her suffer the penalties.
But thats not what Trump supporters are grabbing on to here. They think James possible downfall is a VINDICATION of Trump. Again, this is neither a secret or hard to see.
Nor correct.
I will. It's an easy argument to make.
There are generally 5 elements that must be present for fraud to have occurred.
Trump may have satisfied the first three. There is testimony from the supposed "victims" that he did not meet 4 or 5.
If the allegations against James are true, she would have satisfied all 5.
Not yet proven or convicted...
Where are the "victims" and what damages do they allege? I don't see that in evidence yet.
True. Trump did break the law and was convicted. James, if the allegations are true, broke the law. But she has not yet had due process.
No for the most part she was attacked as the liberal AG of NY who had it out for Trump. Why do you insist on bringing her race into it? "Evil black woman" , "Black bitch", really?!! Who has said that about her except you and perhaps a handful of racists?
Your ability to read minds is truly astounding JR, but if that is indeed what they think then I agree it would be wrong. At most it proves that James is also guilty of fraud and should be held to her own standard.
Ah, then we agree on the actual topic, imagine that. And it could have been that easy without the race baiting off-topic rants, and the casting of shade on my powers of observation...
This makes it sound as if politics was tangential to the cases. Politics is the driving force behind both cases.
That is because it is one-sided. Both "engaged in a "common" misrepresentation" but only one presented themselves as the angel of justice, so to speak, and prosecuted the other for that which she herself was guilty of. That, to my mind, is far, far worse than what is truly likely to be "common misrepresentation" as you put it, meaning it's just a normal part of business. Worse, Trump was penalized far, far beyond any actual damage done, of which there was zero, nada, zip. If James turns out to be guilty, she's guilty of a far greater crime than misrepresentation.
Concerning the difference between Trump and James relating to 4 and 5, the bank did not rely on Trump's estimations. They knew what his property was worth and made their loan off of their own estimates. If true, James made materially false statements, such as her father posing as her husband, a detail a bank would not likely be aware of and therefore would potentially rely on.
5 would be more difficult to prove, as I can only see harm if she defaulted on the loan or some similar thing.
And he will probably never pay a dime, at least not with his money.
She hasn't even been charged yet. This is just the smear phase to keep her out of the next Governor's race.
The only case where possible fraud would be involved would have to include the realtors, appraisers and lender for collusion over issuing a primary residence loan vs a secondary or rental property loan which doesn't need to be prosecuted to correct.
Got to admit that is a very good point, but she hasn't really been found guilty... yet. The evidence, however, is compelling, and her calling that evidence "baseless" is not a good look.
My comment 1.1.8 stands.
As does my comment at 1.1.14, congratulations!
Is that not what I wrote ... that you quoted?
Amazing that you can view Trump who engaged in this crap for decades ... serially engaging in fraud ... as being the lesser of the two crimes. If James did indeed claim a primary residence unlawfully then she committed a crime. One crime with a single property. Trump, in contrast, committed a series of crimes over decades. Yet to you, it is James who is the bigger criminal because you consider this to be a profound character flaw (prosecuting Trump for fraud involving billions of dollars of property values) when she ostensibly committed an act of fraud too (on a single home) that is "far greater" than that of Trump.
I likely will never understand what drives people to bend over backwards in an attempt to defend Trump.
It surprises me to read that from you.
James presenting herself as guiltless (assuming she is guilty) while prosecuting Trump is dishonorable.
But if we are simply comparing honor, I need someone to explain how her dishonor, her lack of integrity, her lack of character (if this is true) compares in any way to that of Trump.
It's probably a bit early for evidence. The story is only a couple of days old. Let's mention here that any of this would be based on the assumption the story is true. There is no currently obvious reason to assume otherwise, but we don't exactly live in an age of high media reliability.
Working from that assumption...the "victims" would be the banks who loaned her money. Reportedly, loans on buildings with 4 units or fewer can be secured by residential real estate loans, which have lower interest rates and probably more favorable loan to value ratios.
If the banks had known the building had 5 units, they would have charged higher interest rates in accordance with their commercial real estate lending instruments. That's why she allegedly misrepresented the number.
That said, there is a legitimate question as to what level of recourse the banks would have taken on their own if they had learned the correct information. That would depend on the amount of interest in question and their obligations under NY real estate statute. Most banks have learned not to interfere with performing loans if they don't have to.
Still, the irony and rampaging entitlement here are off the chart...again... assuming this is all true. The level of stupidity and arrogance you would need to prosecute a former president for a crime you are busily committing yourself is almost too much to believe... which is why I maintain some skepticism about the story.
You seem not to understand my point of view. I don't think Trump engaged in fraud concerning the real estate case. I think he engaged in normal practices concerning loans. I think every single developer, especially at his level, does exactly the same thing.
Probably because you seem not to understand their position as evidenced from the "defending Trump" portion of your comment.
We aren't simply comparing honor. We are comparing facts (in James' case, assumed facts, at this point). If person A tries and convicts person B for some crime person A is secretly guilty of themselves, that's worse than the guilt of party B, since A is not only guilty of the same thing but has the added charge of hypocrisy and breach of public trust in a government official.
Hope that helps.
I understood your point. But you are wrong. Trump truly did engage in fraud as determined in his trial and as upheld by his first appeal. And your extreme claim that 100% of New York developers match the scope and extreme of Trump's case is almost certainly not true. But even if it were true, that would mean that they ALL have broken the law. Normal practice does not mean that the practice is not legal.
So if you now return to the "but they went after Trump and not the other guys" I will again agree with you that this case was politically motivated. But also note that Trump is the Big Fish in the pond. So if New York is out to crack down on fraud, taking down the big guy is a good strategy.
You do not believe you are trying to defend Trump? Seriously, you do not even recognize what you are doing?
That is what your argument boiled down to.
A and B did not commit the same crime. Same general category (if the allegations are true), but not even close in terms of dollars, frequency, and duration. There is the flaw in your thinking.
If the allegations are true, James broke the law and needs to be held accountable. But her crime is a pittance compared to Trump's. She is feeder fish compared to Trump the whale.
Thanks for sharing your opinion. Mine's different. End of discussion.
Why? You know how I feel about hypocrisy. The magnitude or longevity of the dishonorable activity isn't the issue to me, it is the engagement in the same sort of activity by one who is in a position of authority and who prosecutes others for similar crimes, while exclaiming that "nobody is above the law". I also qualified my agreement with Drak's point with, "but she hasn't really been found guilty... yet".
I have no desire to compare her alleged lack of character or honor with that of Trump's. What would be the point of such a comparison, especially since you already know how I feel about Trump? Trump has precisely zero honor, integrity, or character in my view, so how could I possibly think less of James or anyone else for that matter? None of my comments here even hint at the idea that what James may have done is worse than Trump in terms of magnitude, longevity, honor, integrity, or character.
Only if those banks or insurance companies claim they were damaged by having relied on her misrepresentations, right? Same argument made by those who defended Trump.
Maybe.
The difference is that Trump's claims were subjective, and the loans were all commercial. There will be very wide variation on valuations of a truly unique property. The lenders did their own evaluation and acted on that.
Smaller loans tend to be more formulaic.
James' misrepresentation is empirical (if it actually happened). The property has 5 units and supposedly should have been classified as commercial. She allegedly said it had 4 so she could get residential loans. If their rates for residential loans are lower than commercial, they were damaged, even if they don't care. (they probably don't)
If she had not targeted a political enemy for the sake of her own political gain, I don't think anybody would think twice about her own case. But when she threw stones from her glass house, she created her own problem.
Nothing subjective about that.
Fair.
I was thinking about Mar A Lago and those valuations. But when something as concrete as the square footage is off by 200%, that's not subjective.
I wonder why the evidence is already made public? The language of Pulte reeks of retribution
The 1983 and 2000 loans on a $200 home were based on appraisals, FICO scores and the ability to repay the loan by both applicants. While the paperwork should reflect reality there is no advantage gained by misrepresenting the relationship if it was done intentionally. ( To my knowledge I never underwrote a loan in Virginia ) What is the difference to an underwriter if it is father and daughter or a married couple? Obviously they were able to refinance in 2000 so who was harmed?
Likewise it has been a long term issue when underwriting a multi unit property whether to count the owners suite as a rental unit if it is owner occupied. Normally it would not be counted as income producing when calculating the risk. So 4/5 seems not all that strange. If she was living somewhere else it would only make sense to report as much rental income as possible, a 5/5.
Again, not a big deal, who was she cheating, herself? Certainly not the lender or the state or municipality.
I'm just hearing the wind, no storm here.
I was a refi/Lending tree affiliated underwriter in Cherry Hill New Jersey, once upon a time many years ago...
Well you have to build a strong case in order to refer it to the USAG for further action. It reeking of retribution has nothing to do with the facts of the case and Ms. James accountability. Would you prefer the facts/truth remain buried, or would you want them to be exposed as they were in Trump's case? Fraud is fraud and it should be exposed IMHO.
The article to which I linked above explains in detail the fraud that was committed with respect to two different properties and why it should matter to the lenders and to the rule of law. Certainly not to the same monetary level as Trump's misdeeds, but willful fraud nonetheless. And I agree with Ms. James, "Nobody is above the law."
I never had a reason to ask for anyone's marriage license, it would have been unheard of, and probably a civil rights case against the broker or underwriter.
Her signature on documents with her father, as a married couple could very well have been a simple clerical error or incorrectly checked box. However, it is a minor point in the case being considered against her. The other issue you mentioned about the classification of her Brooklyn property is a much more pertinent issue with mortgage fraud and even insurance fraud implications. More detail on that HERE, showing a long history of misrepresentation.
Her father was a co-signer. He was asked to sign documents prepared by others, to guarantee she paid the mortgage. Interesting that she required a cosigner on the second loan as well.
As I pay my youngest's remaining 40k of student loans off, I understand what the consequences of co-signing means.
A normal person isn't getting a primary home with less than-nine-percent down, much less a play home. Some deserving buyer was cheated out of an opportunity by a criminal. At least as much time as Martha.
Have you served? Many vets are eligible for 0% down with a VA Loan.
Are you black? God only knows what kind of programs are available in Virginia.
Maybe the buyer paid part of the closing costs which pushed the down payment amount to 9.2% instead of 10%,
there are many reasons for that that are not a crime. Again, the lender approved the loan and that's all that really matters.
The seller and the lender had to approve and be approved by the banks and banking oversight involved in VA and HUD.
She isn't a criminal until convicted, and this reeks of retribution only. She isn't going to get anything close to Martha if anything at all.
Maybe she can settle out of court like the legendary King Trump has for over 5 decades.
Why isn't her father being charged with the same charges for the loans in 1983 and 2000, presumably the property she lived in while she began attending Howard University in 1984?
The only charges that could possibly stick IMHO are that there is usually a significant difference in interest rates between a principle home
and a secondary home, or a rental home because the level of risk is different. That would be on the loan from 2023.
It's hard to believe that the relators, appraisers and lender were unaware that she was the NY AG and could not be a full time resident in a different state. (She had to provide W2s and bank statements)
In that case the lender could rewrite the existing loan and possibly collect or include the difference between the old loan and the new loan. The Lender cancels the spoiled loan and demands compensation for the difference in interest rates.
They may or may not issue a new loan.