New York Attorney General Letitia James was indicted Thursday on federal bank fraud charges after prosecutors alleged she lied on a mortgage application to obtain favorable loan terms on a Virginia property she later rented out.
The indictment, returned by a federal grand jury, centers on a single-family home in Norfolk, Virginia, that James co-purchased in August 2020 for roughly $137,000. Most of the purchase was financed with a $109,600 loan that prohibited the home from being used as a rental or investment property, according to prosecutors.
By misrepresenting the property as a second home, James received a lower interest rate and saved “approximately $18,933 over the life of the loan,” prosecutors said in a five-page filing.
Federal Housing Finance Agency (FHFA) Director William Pulte referred the case to the Department of Justice earlier this year, prompting a criminal probe that led to Thursday’s indictment.
According to financial disclosure forms reviewed by the New York Post, James repeatedly listed the Norfolk property as an “investment” from 2020 through 2023 in filings with the New York State Commission on Ethics and Lobbying in Government. In 2024, she changed the classification to “real property,” just weeks after the FHFA referral was made.
“The indicted attorney general also estimated the value of the property anywhere between $150,000 and $200,000,” the Post reported.
Despite the loan’s clear prohibition against rental use, prosecutors allege James used the property as a rental investment and earned thousands of dollars in income that she failed to report on multiple disclosure forms.
In her 2020 disclosure, James did list an “investment real property” in Norfolk that generated between $1,000 and $5,000 in revenue, but it is unclear if that referred to the same home named in the indictment.
According to prosecutors, James agreed to a “Second Home Rider” when taking out the loan, which required her to occupy the home as her secondary residence and forbade any rental or shared ownership arrangement.
“Despite these representations,” the indictment reads, “the Norfolk property was not occupied or used by James as a secondary residence and was instead used as a rental investment property.”
Prosecutors also said James made false statements on her homeowners’ insurance application, claiming the home would be “owner occupied,” and on her federal tax filings, where she classified the house as “rental real estate” and reported “thousand(s) of dollars in rents received.”
The federal indictment charges James with two counts: bank fraud and making false statements to a financial institution. If convicted on both counts, she faces up to 60 years in prison and fines totaling as much as $2 million.
James is expected to make her first court appearance on October 24.
Legal experts estimate that James’s defense could cost between $5 million and $10 million. Despite having access to a $10 million state fund established to assist high-profile officials with legal expenses, her office has confirmed that she will not use those resources.
Instead, James has opted to rely on the Democratic Attorneys General Association (DAGA) to help cover her legal costs.
The decision has prompted questions about transparency, as DAGA’s defense fund is not fully subject to public disclosure, and the organization retains discretion over how donations are allocated.
Critics argue that James’s decision to rely on outside funding could allow her to raise millions of dollars from donors without sufficient public oversight.
Legal experts have also highlighted the potential scope of her defense costs. Abbe Lowell, the prominent attorney representing James, reportedly charges more than $1,000 per hour and requires a $1 million retainer.
Former federal prosecutor Neama Rahmani told the New York Post that James’s total legal expenses could ultimately reach as much as $10 million.
“I think all in, it’s probably going to be in the range of $5 to $10 million,” she told the outlet.
