Grand jury refuses to reindict Letitia James in mortgage fraud case
A grand jury in Virginia on Thursday rejected Justice Department efforts to charge New York Attorney General Letitia James with mortgage fraud, declining to indict her again after a judge dismissed the charges last week, according to two people familiar with the matter, who asked to remain anonymous because they were not authorized to speak about the proceedings.
The refusal by a grand jury in Norfolk was an unusual event—grand juries seldom reject a prosecutor’s case. It marks a major defeat for President Donald Trump, who has made a priority of prosecuting James, a longtime foe. As New York attorney general, James brought a civil fraud case against Trump and his real estate empire, which resulted in a verdict that Trump and others in his company had committed fraud.
James’s attorney called the grand jury’s refusal to reindict “a decisive rejection of a case that should never have existed in the first place.”
“This should be the end of this case,” attorney Abbe Lowell said in a statement.
Administration officials, however, were not ready to concede defeat. “There should be no premature celebrations,” said a person familiar with the matter, who spoke on the condition of anonymity because they were not authorized to speak publicly, implying that the administration could try a third time to obtain an indictment. The Justice Department also could still appeal last week’s ruling dismissing the case.
The original indictment in October was not dismissed on the merits of the allegations, but rather because a judge determined that the top prosecutor who presented the case was unlawfully appointed. Grand jury matters are governed by strict secrecy laws, and it is unclear how similar the Justice Department’s presentation on Thursday was to the case it presented to grand jurors previously.
But career prosecutors had viewed the case against James as weak. In September, Trump pushed out his pick for U.S. attorney in the Eastern District of Virginia, Erik S. Siebert, over his decision to not indict James and another of Trump’s targets, former FBI director James B. Comey.
Trump also posted a message on social media demanding that Attorney General Pam Bondi move ahead with the prosecutions. The administration then appointed Lindsey Halligan, one of Trump’s personal lawyers, to replace Siebert. She personally presented the case against James to the grand jury, securing an indictment on one count of bank fraud and one count of making a false statement related to a Virginia property she purchased years ago. Halligan also presented the case against Comey.
A federal judge dismissed both indictments last month, determining that Trump’s rushed appointment of Halligan was unlawful and therefore she did not have the authority to present the cases to a grand jury.
That left the Justice Department with a choice: reindict the cases or appeal the decision.
The Justice Department opted to try to reindict.
On Thursday, Halligan was not involved in the grand jury proceedings. Instead, the administration recruited a Missouri-based prosecutor, Roger Keller, to handle the case.
It is extremely rare for a grand jury to refuse to indict a case. In 2016, for example, the Justice Department brought charges against 130,000 suspects. Grand juries rejected indictments only six times, according to agency statistics compiled by Niki Kuckes, a professor at Roger Williams University with expertise in the grand jury process.
Rejections are unusual, in part because the grand jury process is designed to favor prosecutors. Prosecutors are typically the only ones—besides witnesses and jurors—allowed in the grand jury room. The suspect is not allowed a defense. Prosecutors also are not required to present evidence that could undermine their case and show that the suspect is potentially innocent.
To indict someone, prosecutors need only to convince a majority of grand jurors that there is probable cause that a crime was committed. By contrast, to obtain a conviction at trial, prosecutors need to convince a unanimous trial jury that the defendant committed a crime beyond a reasonable doubt—a significantly higher burden.
The case against James stems from a criminal referral sent to the Justice Department in April by Bill Pulte, the head of the Federal Housing Finance Agency. Pulte, a Trump ally, has also made similar mortgage-fraud allegations against Sen. Adam Schiff (D-California) and Federal Reserve governor Lisa Cook.
Pulte alleged that James lied on loan documents for a house she purchased in Norfolk in 2023. In paperwork related to that purchase, she said the home would be her primary residence, even as she served as attorney general in New York. That constituted an effort to fraudulently obtain “more favorable loan terms,” Pulte said.
The now-dismissed indictment, however, appeared to refer to a separate Virginia property purchased in 2020.
Prosecutors alleged that while James was purchasing the home, she signed a standard document known as a “second home rider” in which she agreed to various rules to obtain more favorable loan terms. Those included a provision that she would keep the property as a secondary residence for her own use unless the lender agreed otherwise in writing.
Instead, prosecutors alleged, James rented the property to a family of three. They accused James of saving nearly $19,000 in mortgage-related costs and fees through that move, which they said was deceptive.
James has denied any wrongdoing in connection with that mortgage application.
A separate investigation into James and her work as state attorney general is being pursued in Albany, the capital, by John Sarcone, who is Trump’s appointee as acting U.S. attorney for the Northern District of New York.
Lawyers for James have argued that Sarcone was improperly appointed, and on Thursday they appeared in court for arguments on whether Sarcone has the authority to issue grand jury subpoenas as part of his probe.
James’s lawyer, Hailyn Chen, argued the subpoenas should be quashed and that Sarcone should be disqualified as head of the prosecutor’s office. The legal arguments are similar to those that defendants have raised in several other cases around the country, in which the Justice Department has taken unusual steps to keep Trump-appointed prosecutors on the job despite their not having won Senate confirmation.
Judge Lorna Schofield did not indicate when she would rule.
Shayna Jacobs contributed to this article from Albany, New York.
See also:
What comes next in the James Comey and Letitia James cases?
Judge tosses cases against Comey and James, rules prosecutor appointment unlawful
High-stakes hearing as Comey and James seek to disqualify prosecutor
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