More on Grand Jury’s Refusal to Reindict Letitia James

Last week, I noted the refusal of a federal grand jury in Norfolk, Va., to return a new indictment against Letitia James, New York’s Democratic attorney general and Trump nemesis. It marked the second time, since a federal judge threw out the indictment originally filed in October, that a grand jury in the Eastern District of Virginia (EDVa) had declined to reindict the charges.

We now have two additional significant details. First, in the most recently proposed indictment, the Trump Justice Department proposed a new felony count of making a false statement to a financial institution (statutorily punishable by up to 30 years’ imprisonment). Second, the Trump DOJ abandoned the main theory of prosecution on which the original indictment had been based — to wit, that James had falsely represented that she would not use the modest Norfolk home at issue as a rental property and had then rented it. (The mortgage rate for owner-occupied property tends to be marginally more favorable than for rental or investment property.)

Over the Trump Justice Department’s objection, Magistrate Judge William Porter refused to keep the most recently rejected indictment under seal. Politico reports that this is because prosecutors had inadvertently failed to ask the court to seal the document when they initially filed it in court. Porter reasoned that the information was already public, a bell that could not be un-rung.

I’ve previously outlined the original charges and the profound weaknesses in the case. (See here, here, here, and here.) The prosecution’s rent theory collapsed because (a) the documents James executed actually did permit her to rent the property at a certain point, yet (b) there is scant evidence that she actually did so.

With that rental theory for bank fraud rendered untenable, the prosecution has shifted to an even more obscure matter: Whether James misled her lenders on the matter of whether she would occupy the property as a second home. To repeat, one of the reasons the experienced former interim U.S. attorney, Erik Siebert, declined to indict James was because

Fannie Mae guidelines do not precisely define what is required for a home to be considered “occupied” — it’s unclear, for example, whether overnight stays or multiple day visits sufficed — prosecutors believed they’d have difficulty showing fraudulent intent. That was especially so because James reportedly informed a number of people involved in the transaction, apparently truthfully, that she was purchasing the home on her niece’s behalf and would occasionally visit.

The strained occupancy theory was the basis for the aforementioned new count proposed by the Trump DOJ, as well as for the overhauled charges, in counts 1 and 2, respectively, of bank fraud and making a false statement to a financial institution. (In the newly proposed and rejected indictment, count 2 charged a false statement about occupancy was made on a “second home rider,” while the newly proposed count 3 alleged the false statement about occupancy was made on an “affidavit of occupancy.”)

The original indictment was sought and obtained by Lindsey Halligan — a former Florida insurance lawyer, personal attorney for Trump, and Trump White House staffer — whom the president directed Attorney General Pamela Bondi to install as interim EDVa U.S. attorney. That was after Trump forced out Siebert, who had concluded that the incriminating evidence was too weak to indict James — and to indict former FBI Director James Comey, whom Halligan also indicted in a separate case.

The indictments against James and Comey were thrown out by Judge Cameron McGowan Currie, a Clinton appointee to the District of South Carolina. Judge Currie had been assigned by the Fourth Circuit to hear the motions by James and Comey to disqualify Halligan on the ground that she was not statutorily qualified to serve as interim U.S. attorney. That is because the governing statute limits such appointments to 120 days for a vacancy in the office of the district U.S. attorney. Siebert had already served 120 days before Halligan was appointed.

Although Halligan had no prior experience as a prosecutor, she opted to handle the grand jury presentations in both the James and Comey cases by herself. AG Bondi tried to shore up her appointment by naming her a “special attorney” and delegating power to exercise the Justice Department’s prosecutorial authority. But this was not done until after the grand jury presentations.

According to the Politico report, Halligan is still signing pleadings as “United States Attorney” as well as “special attorney.” President Trump announced on September 20 — before the James and Comey indictments — that he was nominating Halligan for Senate confirmation to become the full-fledged EDVa U.S. attorney. But her nomination has been blocked by Virginia’s two senators, Mark Warner and Tim Kaine, both Democrats. It has no prospect of advancing, but the president refuses to negotiate with senators from the opposition party — as all presidents must do, and have always done, to get nominees through the confirmation process.

As of this writing, even after Currie’s ruling, the EDVa’s website continues to assert: “Lindsey Halligan is the United States Attorney for the Eastern District of Virginia.” It is not true and it has never been true (even as the ostensible interim U.S. attorney, Halligan was not the U.S. attorney, a position that requires Senate confirmation).

While the president and his top Justice Department officials are miffed that the Senate is blocking Halligan (and other Trump nominees), it is very unwise for the DOJ to say Halligan is the U.S. attorney when she isn’t. Obviously, defense lawyers will use this to their advantage — urging jurors that if the DOJ itself makes false representations about important matters with impunity, they should not find a defendant guilty of making false representations.