Federal authorities have launched a criminal investigation into mortgage fraud allegations involving New York Attorney General Letitia James, according to a source familiar with the probe.
The investigation is being carried out by the FBI and the U.S. Attorney’s Office for the Northern District of New York, based in Albany. It was first reported by the Albany Times Union and stems from a referral sent to the Justice Department last month by Federal Housing Finance Agency (FHFA) Director William Pulte.
The referral was routed to the Northern District of New York, which is overseen by U.S. Attorney John Sarcone III, a figure viewed as an ally of President Donald Trump.
Representative Elise Stefanik, a Republican whose congressional district includes the region where the investigation was initiated, publicly praised the FBI and federal prosecutors for pursuing the case.
“The investigation into Letitia James is a vital step toward justice,” Stefanik said in a statement. “I will continue to fight to expose corruption in New York, protect constitutional rights, and hold failed Democratic leaders accountable.”
In his letter to Attorney General Pam Bondi, Pulte alleged that James falsified records to obtain favorable loan terms on two properties: a home she purchased in Virginia in 2023 and a Brooklyn brownstone she has owned since 2001.
According to the referral, James allegedly indicated that the Virginia property would serve as her “principal residence” while she was serving as New York’s attorney general, a designation that could allow for more favorable mortgage terms. The referral also claims she misrepresented the number of residential units in the Brooklyn property.
“Ms. James, for both properties listed above, appears to have falsified records in order to meet certain lending requirements and receive favorable loan terms,” Pulte wrote in his request to the Justice Department. He said the alleged conduct could potentially give rise to criminal charges, including wire fraud, mail fraud, bank fraud, and making false statements to a financial institution, among other possible offenses.
The FBI and the U.S. Attorney’s Office in Albany did not immediately respond to requests for comment on Thursday. James’ office also declined to comment on the investigation.
James has previously rejected the allegations, describing them as “baseless” and politically motivated. She has argued that the referral and subsequent investigation are part of a broader effort by President Trump and his allies to retaliate against her for her role in pursuing civil fraud litigation against Trump and the Trump Organization.
James rose to national prominence after launching an investigation into Trump in 2019, famously declaring that “no one is above the law.” That investigation culminated in a civil fraud case that resulted in a $454 million judgment against Trump and his real estate company. Trump has appealed the ruling.
In anticipation of the federal probe, the Attorney General’s Office has retained prominent defense attorney Abbe David Lowell, who previously represented Hunter Biden during the special counsel investigation involving the president’s son.
According to the Times Union, Lowell was retained by James’ office in her official capacity rather than by James personally, meaning that New York taxpayers are expected to cover the cost of his legal services.
Democratic lawmakers in Albany are also expected to approve a provision creating a $10 million legal defense fund that state officials can access to cover “reasonable attorneys’ fees and expenses,” including costs related to investigations that are not directly tied to their official duties.
A spokesperson for James’ office told The New York Post earlier this week that the attorney general plans to rely on a combination of state funds and a private legal defense fund to cover her legal expenses as the investigation proceeds.
Lowell has forcefully pushed back on the allegations. In a sharply worded letter sent to Attorney General Bondi last month, he characterized the mortgage fraud claims as unfounded and politically driven.
“These baseless and long-discredited allegations, put to rest by my April 24 letter to the Department of Justice, are suddenly back in the news just days after President Trump publicly attacked Attorney General James,” Lowell said in a statement Thursday. “This appears to be the political retribution President Trump threatened to exact — retribution that Attorney General Bondi assured the Senate would not occur on her watch. If prosecutors are genuinely interested in the truth, we are prepared to meet false claims with facts.”
Adding to James’ legal challenges, America First Legal (AFL), a conservative legal organization aligned with the Trump administration, filed a complaint against her last month with the New York State Unified Court System’s Committee on Professional Standards. The committee oversees disciplinary matters involving attorneys licensed in New York.
In its April 24 complaint, AFL argued that if James engaged in fraud to secure financial benefits from lenders or the government, she may have violated professional ethics rules governing attorneys in the state.
“If Ms. James has engaged in fraud by deceiving her lenders and the government to obtain financial benefits she would otherwise not be entitled to, then she has engaged in professional misconduct,” the complaint stated, adding that such conduct could subject her to discipline by the New York Bar.
The investigation remains ongoing, and no charges have been filed.
This article was first published on The New York Post
