The Daily Populous Saturday October 25th, 2025 day edition
Authored by abcnews.go.com and submitted by XaoticOrder

Attorney General Letitia James speaks during a press conference at her NYC office on October 16, 2025 in New York City.

Prosecutors who investigated New York Attorney General Letitia James for possible mortgage fraud found evidence that would appear to undercut some of the allegations in the indictment of James secured earlier this month -- including the degree to which James personally profited from her purchase of the property -- according to a memo summarizing the state of the case in September, sources told ABC News.

Prosecutors who led the monthslong investigation into James' conduct concluded that any financial benefit derived from her allegedly falsified mortgage would have amounted to approximately $800 in the year she purchased the home, sources said.

The government lawyers also expressed concern that the case could likely not be proven beyond a reasonable doubt because federal mortgage guidelines for a second home do not clearly define occupancy, a key element of the case, according to sources.

Prosecutors detailed the findings to the previous U.S. attorney, Erik Siebert, in an internal Department of Justice memo summarizing the status of the case early last month, according to sources familiar with its contents. Siebert was ousted by President Donald Trump last month after refusing to seek charges against James amid what critics call Trump's campaign of retribution against his perceived political foes.

"I want him out," Trump said the day before Siebert was ousted, telling reporters that it was because Virginia's two Democratic senators supported his nomination. Of James, Trump said, "It looks to me like she is very guilty of something, but I really don’t know."

Interim U.S. Attorney Lindsey Halligan -- who Trump appointed with the explicit mandate of bringing charges against James and others -- secured an indictment against James earlier this month on charges of bank fraud and making false statements to a financial institution.

Last week Halligan abruptly fired the author of the memo, career prosecutor Elizabeth Yusi, in part due to her resistance to bringing the case against James, sources said.

Attorney General Letitia James speaks during a press conference at her NYC office on October 16, 2025 in New York City. Michael M. Santiago/Getty Images

Yusi did not immediately responded to a request for comment from ABC News. A DOJ spokesperson and attorneys for James declined to comment.

James, who has denied all wrongdoing, is set to appear in federal court in Norfolk on Friday to be arraigned.

According to the indictment, James falsely described the property as a second home but used it as an "investment property" rented to a family of three. The grand jury alleged James collected thousands of dollars in rent and would have saved $17,837 over the life of the mortgage versus a loan at a higher rate.

"The charges as alleged in this case represent intentional, criminal acts and tremendous breaches of the public's trust," Halligan said in a statement earlier this month.

But in a memo last month to Halligan's predecessor, prosecutors offered a milder assessment, sources familiar with the memo said.

James purchased the home in Norfolk, Virginia, for her great-niece in 2020 for $137,000 and immediately allowed her and her children to begin living in the house rent-free. Prosecutors met with James' niece, who stated that she had never signed a lease, had never paid rent for the home, and that James had often sent her money to cover some of the expenses, the memo concluded, according to sources familiar with its contents.

While the indictment alleges that James made "thousand(s)" from rental income, sources tell ABC News that prosecutors found no record of James collecting rent from her niece beyond $1,350 that James reported on her 2020 tax return, which was said to cover the cost of utilities, according to sources familiar with the investigation.

As of last month, investigators had met with ten witnesses who offered conflicting accounts about whether James' actions constituted fraud or the degree to which she profited from her actions, the sources said.

James made a 20% down payment on the home -- the same as she would need to make for an investment property -- rather than the 10% typically required for a second home loan, according to sources familiar with the case.

A loan officer who worked with James told investigators that the interest rate for a second home compared to an investment property at the time of James's purchase would have been between 0.25% and 0.50% lower, a difference that would have amounted to $15 to $30 less in a monthly mortgage payment, or as much as $10,800 less over the life of the 30-year loan, according to sources familiar with what the loan officer told investigators. In the indictment, Halligan alleged that James avoided a 0.815% higher interest rate, potentially saving James $17,837 over the life of the loan.

But prosecutors expressed concern that the vagueness of federal mortgage guidelines would make it challenging to prove that James' actions were intentionally fraudulent by falsely claiming that she intended to occupy the home, sources told ABC News. That's because Fannie Mae guidelines do not clearly define the term "occupied" -- leaving it unclear if a person needs to sleep overnight at the home or just visit multiple times each year.

Witnesses told prosecutors that James repeatedly informed realtors and loan officers that the home would be for her niece, but that she would occasionally stay there when visiting her family in Virginia, the sources said. James' niece told investigators that James visited their home multiple times a year but had not stayed overnight.

Prosecutors argued that because James actually overnighted at hotels when visiting family -- rather than staying at the home -- she could not be considered to be an "occupant" to justify that the home was a second property.

funky_duck on October 24th, 2025 at 22:44 UTC »

The whole case is around James getting a loan for a 'second home' vs an 'investment property' - Trump is alleging James got a favorable loan for a second home and then used it as a rental property.

Except... James never actually rented the property, she let family stay in for free. OK, even if that still counts, the entire benefit to James is at most $800.

Trump launched the entire DOJ at James over, at most, $800.

dontrike on October 24th, 2025 at 22:34 UTC »

Well duh, that's why Trump fired a guy, because they couldn't find any evidence of his random claim that she did something.

MentokGL on October 24th, 2025 at 22:31 UTC »

Who knew that politically motivated revenge wouldn't be on solid legal footing???