Senior investigators at Fannie Mae believed there was no clear proof that New York Attorney General Letitia James committed mortgage fraud, according to new details revealed in a court filing from her legal team on Monday, Reuters reported. The filing urges a federal judge to dismiss the case, arguing that the government relied on improper tactics when it brought charges against the elected Democrat.
James faces accusations of bank fraud and making a false statement to a financial institution. Prosecutors claim she violated loan terms by treating a Virginia property as an investment rather than a secondary residence. She has pleaded not guilty and says the charges are politically driven.
Her legal team disclosed internal Fannie Mae communications suggesting the case lacked substance from the start. In June, Sean Soward, Fannie Mae’s director of mortgage fraud, told Jennifer Horne, the company’s vice president of financial crimes, that the evidence fell short of proving fraud.
Filing raises questions about role of Trump ally Bill Pulte
James is among several critics of President Donald Trump who now face criminal charges after Trump urged the Justice Department to pursue his political opponents. The case against her began after Bill Pulte, head of the Federal Housing Finance Agency and a close Trump ally, sent prosecutors a criminal referral.
Attorney General Pam Bondi then assigned Ed Martin, a political appointee known for handling “weaponization” initiatives, to work on the case as a special assistant U.S. attorney. Later, Trump installed Lindsey Halligan — his former personal lawyer with no prior prosecutorial experience — as U.S. attorney for the Eastern District of Virginia. Her predecessor had refused to bring the charges due to a lack of evidence.
James’ attorneys say Pulte may have obtained non-public mortgage records about their client. They noted that he sent Halligan a private letter on October 6 outlining financial calculations tied to the property and information from Fannie Mae’s investigative team. Days later, Halligan brought the matter before a grand jury in Alexandria, not the original grand jury convened in Norfolk. The indictment that followed contained the same calculations Pulte had sent.
“Director Pulte abused his position to direct an investigation of AG James outside normal procedures, despite being told repeatedly there was no evidence of wrongdoing,” the filing states.
Reuters recently reported that the White House removed FHFA’s acting inspector general, Joe Allen, shortly after he attempted to provide prosecutors with discovery material required by law. James’ lawyers say that information has still not been turned over.
The filing also criticizes Martin for posing for photos outside James’ Brooklyn home and for sending her a letter urging her resignation. Her attorneys say the letter violated Justice Department policy, federal prosecution standards, and professional ethics rules.