It appears that DOJ standards have changed.
T he minute details of the Letitia James indictment are going to make our heads hurt. And trust me, they are minute. Still, the overarching storyline is easy: New York’s attorney general has been charged with doing pretty much what she sued Donald Trump for doing. She tried to bankrupt him and destroy his family business over making financial misrepresentations, and now she’s accused of doing the same thing.
If the allegations in the indictment are accurate, she will be forced to counter that: The misstatements are trivial, her lenders knew exactly who she was, the prosecution’s claim that they’d have charged her a higher interest rate if she’d been more accurate in the paperwork is complete speculation, she paid her bills on time, and her bank made money off the transaction — i.e., this is a fraud case with no fraud victims.
Where have we heard that before? Oh, right, in Trump’s defense against the allegations in the fraud case with no fraud victims that James lodged against him.
Naturally, she’ll also contend that: This is totally political, she’s being singled out because she’s Trump’s political enemy, and Trump ran for office promising retribution against James and his other tormentors — the video clips are all over social media! (Sound familiar?) Plus, the alleged offense is so minor it is beneath the Justice Department’s standards for fraud prosecutions, meaning that, were it not for the fact that Trump has Tish Derangement Syndrome, she would never have been charged.
And all of that will be true . . . which is fine, except it’s a jury defense, not a legal defense.
That is, these are the kinds of defense claims that almost never get a criminal case thrown out pretrial by the judge. (Although in a federal criminal case, even one presided over by a Biden appointee, Judge Jamar Walker, James can take some solace in knowing she will not be found guilty before the trial even starts, as happened to Trump in the state court travesty that the elected progressive Democratic judge, Arthur Engoron, helped James execute.) In federal criminal law, if the indictment states a crime, no matter how gossamer light, in the absence of a guilty plea the case almost always goes to trial.
I would not bet the farm on winning a selective prosecution claim (the legal test for which I discussed in the context of the James Comey prosecution, here). No matter how silly and wasteful I may think this case is (more on that momentarily), the Justice Department is going to be able to show that (a) it does prosecute some minor fraud cases, and (b) it is more inclined toward such prosecutions when the minor fraud is committed by someone holding an office of public trust and when it is committed against a financial institution. Under those circumstances, even if we recognize that James has been singled out, it will be very hard for her to establish that she has been actionably singled out, such that the indictment should be dismissed. The selective prosecution jurisprudence is very uphill for defendants — even if the defendant can easily prove that the head of the prosecutorial authority hates her, targeted her, and demanded that his subordinates indict her against their better judgment.
So, what exactly are we talking about here? It’s important to be clear on that. There has been so much misinformation that even James’s very experienced defense lawyer, Abbe Lowell, believed that the Trump Justice Department’s fraud probe involved a Virginia property different from the one over which James has been charged. (See Lowell’s April 24, 2025, letter to Attorney General Pam Bondi, p. 4.)
On Thursday, a grand jury in the Eastern District of Virginia (EDVa) charged New York’s attorney general with two felony counts: bank fraud (Section 1344 of the federal criminal code) and making false statements to a financial institution (Section 1014).
To show that Trump has a sense of humor after James tried to destroy him financially with a nearly half-billion-dollar judgment (that has since been thrown out by an appeals court), the indictment against James includes a forfeiture notice: Yes, Uncle Sam is coming after this master criminal’s “ill-gotten gains” — all of $18,933. As we’ll see, that works out to about $600 per year (that’s hundred, not hundred million) over the life of the loan in question.
As you’d expect, in light of the resources that the Justice Department typically pours into financial scam cases involving astronomical dollar amounts, the statutory penalties for bank fraud are severe. In theory, the 66-year-old James faces up to 60 years’ imprisonment, plus a fine of up to $2 million. In reality, under the sentencing guidelines for an offense as de minimis as the allegation here, James faces little or no jail time — though, if convicted, she would probably have to fork over that $18,933 (with interest!).
The charges center on a residential home James purchased on Perrone Avenue in Norfolk, Va., which the indictment refers to as the “Perrone property.” As noted above, this has proved confusing for us analysts because James has at least two Norfolk properties; everyone, including Lowell, assumed that any criminal charges would involve the other one.
That’s because of Bill Pulte. Nominally, Pulte is Trump’s Federal Housing Finance Agency chief. In truth, at least when he’s not barely avoiding fist fights with other administration officials, his main job is to scrutinize the mortgage records of the boss man’s political foes and ferret out misstatements that might be inflated into felony bank fraud. That’s eerily similar to what James did to Trump — in a case, I remind you, that was so ridiculous even Manhattan District Attorney Alvin Bragg took a pass on it, deciding the Stormy Daniels hush money caper would be a more dignified use of prosecutorial resources.
Pulte perused James’s mortgage records, found what he said were misrepresentations in the documents, and referred her to Trump’s Justice Department for prosecution. In most public commentary, including by Pulte and Lowell, the spotlight was on a Norfolk home that James had said, in one document mined out of a ream’s worth, would be her principal residence (even though New York’s attorney general makes her primary home in Brooklyn). But, as Lowell convincingly showed, the comprehensive record suggests that this was an inadvertent error: James had been clear in explaining to lenders that she was helping her niece buy the home.
Since a bank fraud conviction requires proof beyond a reasonable doubt of fraudulent intent, there was clearly no prosecutable case. Most of us assumed that was why Erik Siebert, the U.S. attorney Trump fired for declining to charge James (and Comey), had refused to indict her.
It turns out, though, that the case the Trump DOJ brought against James involves a different Norfolk home, the “Perrone property.”
To boil it down (i.e., to spare you the labyrinth of financial institutions and ties to Fannie Mae that provide federal jurisdiction over this matter), James is said to have obtained the Perrone property in August 2020 for $137,000, financed by a $109,600 mortgage loan. It’s a modest home: three bedrooms, one bath. She signed a “second home rider” in which she committed that she would personally occupy the property as a “secondary residence” and would not rent it out. The Trump DOJ alleges that she nevertheless did not live in the home and rented it to a family of three. On her tax returns, it’s said that she declared payments by the family as rental income while claiming business deductions for expenses related to the property.
The indictment further alleges that by representing that she’d live in the property rather than lease it, she got a 3 percent mortgage rate. Generally, residential mortgages have lower rates than investment or commercial ones. In the indictment, the government claims the “comparable investment property rate” that James should have been charged was a little less than a point higher than the residential rate she got (3.815 percent, rather than 3 percent). This, the indictment says, computes to “$17,837 in rate savings over the life of the loan” — the lion’s share of James’s “ill-gotten gains.”
The indictment doesn’t specify the duration of the mortgage agreement, but the information provided suggests a standard 30-year term. I won’t swear by my math (though I am quite confident that the Trump DOJ left out the loan duration because it would prefer that we not do this math), but if I’m right about the 30-year term, and if the indictment is right that James saved less than $18K because of her alleged misrepresentation, then her monthly payments were probably about 50 bucks less at the 3 percent rate than they would have been at 3.815 percent.
For good measure, the DOJ says James also reeled in a grand total of $1,096 from an inflated fee (the “seller credit” for residential loans is higher than for investment properties — here, $3,288 instead of $2,192). That’s how prosecutors come up with the final tally: the whopping $18,933.
That’s it. That’s the 60-year bank fraud offense your United States Department of Justice has poured your tax dollars into indicting so it can nail one of the president’s enemies (who, yes, similarly wasted millions of New Yorkers’ tax dollars on her own Captain Ahab crusade against Trump).
In short, this may be the stupidest case of all time. Or, President Trump might quip, the second-stupidest case of all time — which, obviously, is the point.
In higher-brow Standards of Federal Prosecution lingo, it is not in the public interest, and thus is beneath Justice Department standards, to expend public resources on a prosecution of an isolated transaction (i.e., no serial fraud schemes) involving dollar amounts so minor that the interested parties, if so moved, could settle their differences by civil or criminal litigation in state courts. (Compare: Justice Dept. Manual, §9-43.100, “Prosecution Policy Relating to Mail Fraud and Wire Fraud.”)
None of that makes James innocent. Moreover, she is a public official who enforces the law, and who, while speaking of her case against Trump, intoned:
When powerful people cheat to get better loans, it comes at the expense of hardworking people. Everyday Americans cannot lie to a bank to get a mortgage, and if they did, our government would throw the book at them. There simply cannot be different rules for different people.
With the shoe now on the other foot, I imagine we’ll be hearing a lot from Abbe Lowell about how, in reality, our government does not throw the book at every American who bends the truth a tad to lower the monthly mortgage nut by a few dollars; and that, by throwing the book at James, the Trump DOJ is precisely applying different rules to a different person whom Trump happens to abhor.
And I’d add this cautionary note: A prosecution case rarely looks better than on the day an indictment is announced. After that, defense lawyers start kicking the tires. Remember, the allegation regarding the other Norfolk property was never brought, probably because Lowell got wind of it, dug into the record, found documents that added context, and showed that James did not have fraudulent intent. By contrast, it looks like he was in the dark regarding the Perrone property transaction. He’s not in the dark anymore, so I’d expect him to come out swinging once he has his arms around the entirety of the record.
And let’s not forget what we discussed yesterday: The Trump DOJ’s appointment of Lindsey Halligan as an interim U.S. attorney is on shaky footing. The defense has already signaled that a motion to dismiss is coming in the Comey case, and the James case will be no different.
All that said, we’ll have to await James’s side of the story. So far, her responsive rhetoric is all about Trump’s vindictiveness. That point is inarguable, but it’s not the same as saying, “I didn’t do what they’ve accused me of doing,” while providing some convincing details. Maybe that’s coming from Lowell; we’ll see.
Meantime, bear in mind that Erik Siebert, a very experienced prosecutor, refused to bring this case. Maybe that means there’s exculpatory evidence we haven’t seen yet. Note, for example, NYU law professor Ryan Goodman’s observation based on news reporting: Senior DOJ leadership worried that Fannie Mae’s vague guidelines on distinguishing a “second home” from an “investment property” would render it impossible to prove guilt beyond a reasonable doubt.
Or maybe Siebert wouldn’t bring the case because, even if it might be possible to prove guilt, the allegation was too trivial to meet DOJ standards.
It appears that DOJ standards have changed.