Grand jury rejects new mortgage fraud indictment against New York
Attorney General Letitia James
[December 05, 2025]
By ALANNA DURKIN RICHER and OLIVIA DIAZ
NORFOLK, Va. (AP) — The Justice Department failed Thursday to secure a
new indictment against New York Attorney General Letitia James after a
judge dismissed the previous mortgage fraud prosecution encouraged by
President Donald Trump, according to people familiar with the matter.
Prosecutors went back to a grand jury in Virginia after a judge’s ruling
halting the prosecution of James and another longtime Trump foe, former
FBI Director James Comey, on the grounds that the U.S. attorney who
presented the cases was illegally appointed. But grand jurors rejected
prosecutors' request to bring charges.
It's the latest setback for the Justice Department in its bid to
prosecute the frequent political target of the Republican president.
Prosecutors are expected to try again for an indictment, according to
one person familiar with the matter who spoke on the condition of
anonymity because they were not authorized to publicly discuss the case.
James was initially charged with bank fraud and making false statements
to a financial institution in connection with a home purchase in
Norfolk, Virginia, in 2020. Lindsey Halligan, a former White House aide
and Trump lawyer, personally presented the case to the grand jury in
October after being installed as U.S. attorney for the Eastern District
of Virginia amid pressure from Trump to charge Comey and James.
James has denied any wrongdoing and accused the administration of using
the justice system to seek revenge against Trump’s political opponents.
In a statement Thursday, James said: “It is time for this unchecked
weaponization of our justice system to stop.”
“This should be the end of this case,” her attorney, Abbe Lowell, said
in a statement. “If they continue, undeterred by a court ruling and a
grand jury’s rejection of the charges, it will be a shocking assault on
the rule of law and a devastating blow to the integrity of our justice
system.”
The allegations related to James’ purchase of a modest house in Norfolk,
where she has family. During the sale, she signed a standard document
called a “second home rider” in which she agreed to keep the property
primarily for her “personal use and enjoyment for at least one year,”
unless the lender agreed otherwise.
Rather than using the home as a second residence, James rented it out to
a family of three, allowing her to obtain favorable loan terms not
available for investment properties, prosecutors alleged.
It's the latest example of pushback by grand jurors since the beginning
of the second Trump administration. It's so unusual for grand jurors to
refuse to return an indictment that it was once said that prosecutors
could persuade a grand jury to “indict a ham sandwich.” But the Justice
Department has faced setbacks in front of grand juries in several recent
cases.
Even if the charges against James are resurrected, the Justice
Department could face obstacles in securing a conviction against James.
[to top of second column]
|
New York Attorney General, Letitia James, speaks after pleading not
guilty outside the United States District Court, on Oct. 24, 2025,
in Norfolk, Va. (AP Photo/John Clark, File)
James’ lawyers separately argued the case was a vindictive
prosecution brought to punish the Trump critic who spent years
investigating and suing the Republican president and won a
staggering judgment in a lawsuit alleging he defrauded banks by
overstating the value of his real estate holdings on financial
statements. The fine was later tossed out by a higher court, but
both sides are appealing.
The defense had also alleged “outrageous government conduct”
preceding her indictment, which the defense argued warrants the
case’s dismissal. The judge hadn’t ruled on the defense’s arguments
on those matters before dismissing the case last month over the
appointment of Lindsey Halligan as U.S. attorney.
U.S. District Judge Cameron McGowan Currie took issue with the
mechanism the Trump administration employed to appoint Halligan to
lead one of the Justice Department’s most elite and important
offices.
Halligan was named as a replacement for Erik Siebert, a veteran
prosecutor in the office and interim U.S. attorney who resigned in
September amid Trump administration pressure to file charges against
both Comey and James.
The following night, Trump said he would be nominating Halligan to
the role of interim U.S. attorney and publicly implored Attorney
General Pam Bondi to take action against his political opponents,
saying in a Truth Social post that, “We can’t delay any longer, it’s
killing our reputation and credibility” and “JUSTICE MUST BE SERVED,
NOW!!!”
Comey was indicted three days after Halligan was sworn in by Bondi,
and James was charged two weeks after that.
The Justice Department had defended Halligan’s appointment but has
also revealed that Bondi had given Halligan a separate position of
“Special Attorney,” presumably as a way to protect the indictments
from the possibility of collapse. But Currie said such a retroactive
designation could not save the cases.
___
Richer reported from Washington.
All contents © copyright 2025 Associated Press. All rights reserved
 |
