Prosecutor Shocks DOJ: New York AG Letitia James Indicted on Mortgage Fraud Charges
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Washington, D.C. – October 10, 2025
U.S. Attorney Lindsey Halligan bypassed top officials to secure a federal indictment against New York Attorney General Letitia James, sources say, leaving Attorney General Pam Bondi reeling from the surprise maneuver. The charges—bank fraud and making false statements to a financial institution—stem from allegations that James misrepresented a Virginia property purchase in 2020 to secure favorable loan terms, a probe that career prosecutors had dismissed as lacking merit.Halligan, a 36-year-old former beauty queen and Trump loyalist with zero prosecutorial experience before her appointment two weeks ago, presented the case solo to a grand jury in Alexandria, Virginia, without notifying Bondi or Deputy Attorney General Todd Blanche, according to multiple sources familiar with the matter.
The move marks the second high-profile indictment from the Eastern District of Virginia under Halligan's watch, following last month's charges against former FBI Director James Comey—another Trump adversary—prompting accusations of a White House-orchestrated revenge campaign.
Bondi, a longtime Trump ally and former Florida attorney general, was "blindsided" by the timing and execution, insiders told CNN, reflecting her private doubts about the strength of the evidence against James.
Despite publicly backing Halligan's efforts—tweeting "One tier of justice for all Americans" after the indictment—the episode underscores tensions in a DOJ increasingly pressured to target the president's political foes.
"The Justice Department is united as one team," a DOJ spokesperson insisted in a statement, but behind-the-scenes friction suggests otherwise.The Indictment: A $109,600 Loan and a Family Favor Gone AwryThe five-page federal indictment, unsealed Thursday, accuses James of deliberately misleading lenders OVM Financial and First Savings Bank to obtain a Fannie Mae-backed mortgage of approximately $109,600 for a three-bedroom home in Norfolk, Virginia.
Prosecutors allege James signed documents claiming the property would serve as her "secondary residence," a classification that barred rental use and unlocked lower interest rates and better terms than those for investment properties.In reality, the government claims, James intended the home as an investment, ultimately renting it to a family of three shortly after closing—violating the loan agreement and defrauding the institutions.
The purchase, sources say, was intended to assist James's niece, Shamice, in establishing a foothold in Virginia, but paperwork inconsistencies— including statements to a loan broker that the property "will be Shamice’s primary residence"—raised red flags during a federal probe launched in May.
If convicted on both counts, James faces up to 30 years in prison per charge, a $1 million fine each, and potential forfeiture of the property, though federal sentencing guidelines typically result in far lighter penalties.
James, 66, vehemently denied wrongdoing in a fiery video statement Friday, declaring, "I am not fearful, I am fearless."
@Fernand46357857
Her attorney, Abbe Lowell, called the case a "bogus criminal fabrication" driven by Trump's "personal vendetta," pointing to the president's repeated public calls for her prosecution.
The investigation originated from a criminal referral by Federal Housing Finance Agency Director Bill Pulte in April, who accused James of falsifying documents across multiple properties, including a Brooklyn townhouse and an earlier Virginia home.
Career prosecutors in Virginia's Eastern District, however, found "no clear evidence" of knowing fraud after months of review, sources told ABC News—advice that preceded the ouster of Halligan's predecessor, Erik Siebert, for dragging his feet on Trump-directed probes.
Halligan's High-Stakes Gamble: From Pageant Stage to Federal Courtroom
Halligan's rapid rise has captivated—and divided—legal circles. A former Miss Colorado USA contestant and Florida insurance litigator, she joined Trump's personal legal team in 2022, defending him during the Mar-a-Lago classified documents probe.
Trump personally nominated her for the "rocket docket" role on September 21 via Truth Social, praising her as "tough, smart, and loyal" and urging Bondi to "get things moving" against Comey, James, and California Sen. Adam Schiff.
Critics, including former Watergate prosecutor Nick Akerman, warn Halligan is "playing a pretty dangerous game" with her law license by pursuing politically charged cases without prosecutorial chops.
Her first grand jury appearance last month yielded Comey's indictment on false statements and obstruction—another case career lawyers deemed thin—setting a pattern of solo acts that bypass DOJ headquarters.
Halligan had eyed a Norfolk grand jury for James, believing it more receptive, but opted for Alexandria instead, catching even sympathetic DOJ contacts off guard.
The "battle of the blondes," as one tabloid quipped, pits Halligan's aggressive style against Bondi's more measured approach, with whispers of White House favoritism fueling speculation of internal power plays.
Trump, who once branded James "scum" and "racist" for her 2022 civil fraud suit that saddled his empire with a $500 million penalty (later reduced on appeal), has not commented directly but reposted supporters celebrating the news.
Broader Fallout: A DOJ Under Siege?
James's indictment—the latest in a string of Trump-era probes into figures like Schiff and Federal Reserve Gov. Lisa Cook—has ignited bipartisan fury.
Senate Judiciary Ranking Member Dick Durbin decried it as evidence of a "weaponized Justice Department," urging Republicans to "speak up now."
@SenatorDurbin
On X, reactions ranged from gleeful MAGA cheers—"Corrupt NY AG Letitia James INDICTED for Fraud!"—to Democratic outrage labeling it "political retribution." Legal experts predict a protracted fight, with James's team vowing to challenge the charges' validity and Halligan's authority—challenges already mounting in the Comey case.
As one anonymous DOJ veteran put it: "This isn't justice; it's a circus with indictments as the opening act."James is due for arraignment next month, but the real trial may unfold in the court of public opinion—and the corridors of power—where Trump's retribution machine shows no signs of slowing. For Bondi, navigating the fallout could test her grip on an administration where loyalty often trumps protocol.
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