FBI Launches Criminal Probe into New York AG Letitia James Over Alleged Mortgage Fraud

Albany, NY – May 9, 2025 – The Federal Bureau of Investigation (FBI) and the U.S. Attorney’s Office in Albany have initiated a formal criminal investigation into New York Attorney General Letitia James, focusing on allegations of mortgage fraud, according to multiple reports citing law enforcement sources. The probe stems from a criminal referral by the Federal Housing Finance Agency (FHFA), which accuses James of falsifying records to secure favorable loan terms on properties in New York and Virginia.

The investigation centers on claims that James misrepresented a Norfolk, Virginia, property purchased in 2023 as her primary residence, despite her role as New York’s attorney general requiring state residency. FHFA Director William Pulte alleged in a letter to U.S. Attorney General Pam Bondi that James’ actions could constitute wire fraud, mail fraud, bank fraud, and false statements to a financial institution. Additionally, Pulte claimed James misrepresented a Brooklyn property she owns as having four units instead of five to qualify for better loan terms and falsely listed her father as her spouse on a 1983 mortgage application.

James, a Democrat who has served as attorney general since 2019, has denied the allegations, calling them “baseless” and politically motivated. Her office has accused the Trump administration of weaponizing federal agencies against her due to her high-profile legal actions against former President Donald Trump, including a 2022 civil fraud lawsuit that resulted in a $454 million judgment against him. James has hired prominent defense attorney Abbe Lowell, who described the referral as “improper political retribution” in a letter to Bondi, arguing that the claims are “long-disproven” and lack credible foundation.

The FBI’s Albany office is handling the investigation, which marks an escalation from the FHFA’s initial referral in April 2025. No charges have been filed, and the Department of Justice and FBI have declined to comment. A pro-Trump legal group, America First Legal, has also filed an ethics complaint against James in New York, further intensifying scrutiny.

Legal experts have noted the political undertones of the probe, with some suggesting it could have a chilling effect on state officials challenging the Trump administration. Former federal prosecutor Neama Rahmani told Newsweek that misrepresenting residency for better mortgage rates could constitute mortgage fraud, a federal crime, but emphasized the case’s political context given James’ history with Trump. New York Governor Kathy Hochul has also criticized the investigation, suggesting it aligns with Trump’s vows to target his adversaries.

James has remained defiant, stating in a recent Spectrum News interview that she will not be intimidated and is focused on protecting New Yorkers. She has also joined other Democratic attorneys general in lawsuits challenging Trump’s second-term policies, including tariffs and election rule changes.

The investigation’s outcome remains uncertain, with statutes of limitations potentially affecting older allegations, such as the 1983 claim. Legal analyst Nicole Brenecki noted that while the allegations mirror the civil fraud James prosecuted against Trump, proving criminal intent could be challenging. For now, the probe continues to draw attention as a flashpoint in the ongoing tensions between James and the Trump administration.

Sources: CBS News, Newsweek, Reuters, Washington Examiner, The Times Union

17GEN4.com