A memo recommending against charges raises more questions. The veteran prosecutor who wrote it was fired.
After the Trump Justice Department indicted another of the president’s political enemies, New York Attorney General Letitia James, I observed that newly emerging details in the ensuing days made the case appear more complicated than the DOJ had initially suggested.
James was arraigned on the bank-fraud indictment today in Norfolk federal court — the Eastern District of Virginia (EDVa) — before Judge Jamar Walker, a Biden appointee. She pled not guilty. Meantime, additional reporting by ABC News about the case raises still more questions.
The indictment alleges that James falsely claimed she would occupy the modest Norfolk home rather than rent it, in order to obtain a lower mortgage interest rate.
Sources familiar with a memorandum that prosecutors filed with former interim U.S. Attorney Erik Siebert, urging him not to pursue a grand jury indictment, say there is no evidence that James received more than $1,350 in income on the property that she reported on her 2020 tax return — and that amount was to cover utilities. James claims to have purchased the home for her great niece, Nakia Thompson, who says James did not charge her rent. Prosecutors are said to have concluded that the financial benefit to James from the allegedly falsified mortgage would have amounted, at most, to about $800.
Using the Justice Department’s numbers, which allege that James’s mortgage rate was 0.815 percent lower than it should have been (3 percent, rather than 3.815), I originally estimated that she’d have saved no more than $50 per month over the life of a 30-year mortgage. But the ABC report says a loan officer who worked with James told the government that the difference between interest rates for a second home versus an investment property was less than the indictment claims — somewhere between 0.25 and 0.50 percent. That would only have amounted to about $15 to $30 per month — or approximately $10,800 over 30 years, not the $17,837 the indictment alleges.
More significantly, as I related previously, after about a year, there was an amendment to the mortgage agreement that gave James more leeway in how the property could be used. Between the amendment and the fact that 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.
As noted in my last post, although the great niece, Nakia Thompson, was called to testify before a Norfolk grand jury and apparently provided exculpatory testimony, she was not called to testify before the Alexandria grand jury that indicted the case. (It is unknown whether transcribed Norfolk testimony was read or otherwise presented to the Alexandria grand jury). The indictment does not refer to the amendment of the mortgage agreement, so it is unknown if the grand jury was informed of it.
Upon declining to indict James and former FBI Director Jim Comey, interim U.S. Attorney for the Eastern District of Virginia Erik Siebert was fired by President Trump, who replaced him with Lindsey Halligan. A former Florida insurance lawyer, personal attorney to Trump, and White House staffer, Halligan had never prosecuted a criminal case (the Comey grand jury presentation was her first case). Halligan is said to have personally presented the James case to the Alexandra grand jury, obtaining the two-count indictment on charges of bank fraud and lying to a financial institution. The charges carry a potential statutory penalty of 60 years imprisonment.
ABC News says that the memorandum analyzing the case and recommending against charges was authored by a veteran career prosecutor, Elizabeth Yusi. Last week, Halligan fired Yusi.
James has indicated that she, like Comey, will move to dismiss the charges on the ground that Halligan is not qualified under the governing statute to serve as interim U.S. attorney. Earlier this week, I discussed the motion that Comey filed along those lines.