Grand jury rejects new mortgage fraud indictment against New York Attorney General Letitia James : NPR
New York Attorney General Letitia James speaks after pleading not guilty in U.S. District Court October 24, 2025, in Norfolk, Virginia.
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John Clark/AP
The Justice Department failed Thursday to obtain a new indictment against New York Attorney General Letitia James after a judge dismissed the previous prosecution for mortgage fraud encouraged by President Donald Trump, according to people familiar with the matter.
Prosecutors returned to a grand jury in Virginia after a judge’s ruling ending 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 file charges.
It’s the latest setback for the Justice Department in its attempt to prosecute the Republican president’s frequent political target.
Prosecutors are expected to try again for an indictment, according to a person familiar with the matter who spoke on condition of anonymity because they were not authorized to discuss the case publicly.
James was initially charged with bank fraud and making false statements to a financial institution in connection with the purchase of a home in Norfolk, Virginia, in 2020. Lindsey Halligan, a former White House aide and Trump attorney, personally presented the case to the grand jury in October after being appointed U.S. Attorney for the Eastern District of Virginia, under pressure from Trump to indict Comey and James.
James has denied any wrongdoing and accused the administration of using the legal system to get revenge on Trump’s political opponents. In a statement released Thursday, James said: “It is time for this unchecked militarization of our justice system to end. »
“This should bring closure to this matter,” his attorney, Abbe Lowell, said in a statement. “If they continue, undeterred by a court ruling and a grand jury’s dismissal of the charges, it will constitute a shocking attack on the rule of law and a devastating blow to the integrity of our justice system.”
The allegations concerned James’ purchase of a modest home in Norfolk, where she has family. When selling, she signed a standard document called a “second home addendum” in which she agreed to keep the property primarily for her “personal use and enjoyment for at least one year” unless the lender decided otherwise.
Rather than using the house as a second home, James rented it to a family of three, allowing him to obtain favorable loan terms not available for investment properties, prosecutors alleged.
This is the latest example of grand juror refusal since the start of the second Trump administration. It is so unusual for grand juries 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 before grand juries in several recent cases.
Even if the charges against James were resurrected, the Justice Department could face obstacles in securing a conviction against James.
James’ lawyers have separately argued that it was a vindictive suit brought to punish the Trump critic who spent years investigating and prosecuting the Republican president and won a stunning judgment in a lawsuit alleging he defrauded banks by overstating the value of his real estate in financial statements. The fine was later thrown out by a higher court, but both sides appealed.
The defense had also alleged “scandalous government conduct” before his indictment, which the defense said justified dismissal of the case. The judge had not ruled on the defense’s arguments on those issues before dismissing the case last month regarding the appointment of Lindsey Halligan as U.S. attorney.
U.S. District Judge Cameron McGowan Currie challenged the mechanism the Trump administration used to appoint Halligan to head one of the Justice Department’s most elite and important offices.
Halligan was named to replace Erik Siebert, a veteran prosecutor in the office and acting U.S. attorney who resigned in September under pressure from the Trump administration to pursue charges against Comey and James.
The following night, Trump said he would nominate Halligan as acting U.S. Attorney and publicly implored Attorney General Pam Bondi to take action against his political opponents, stating in a Truth Social article that “We can’t wait any longer, this is 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 indicted two weeks later.
The Justice Department had defended Halligan’s appointment, but also revealed that Bondi had given Halligan a separate “special prosecutor” position, likely to protect the indictments from possible collapse. But Currie said such retroactive designation could not save the cases.
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Richer reported from Washington.
