In a new development in his counteroffensive against perceived enemies, President Trump has turned to allegations of mortgage fraud as a weapon.
At least three notable opponents of Trump are now under scrutiny from the Department of Justice related to their personal real estate dealings.
Recently, Trump pointed to accusations against Lisa Cook, a Federal Reserve Board member, as rationale for attempts to remove her. Cook has already labeled this initiative as “unprecedented illegal.”
New York Attorney General Letitia James and Senator Adam Schiff are also reportedly under investigation in connection with mortgage records.
These allegations stem from the Federal Housing Finance Agency (FHFA), where directors have put forth a criminal referral indicating that several residences may have been improperly classified as primary homes, allowing access to lower interest rates and favorable loan conditions.
On August 15, Cook, who had previously listed properties in both Michigan and Georgia as her “primary residence,” introduced her Georgia property in 2022. The referral from Bill Prute suggests that improper statements were made to financial institutions, and he has urged the Justice Department to pursue prosecution.
On social media, Prute stated he submitted additional evidence that Cook misrepresented a third property as a “second home,” despite labeling it as an investment or rental property in other official documents.
“Three strikes and you’re out,” remarked the FHFA director.
This applies similarly to both James and Schiff.
Prute specifically alleged that while in office in New York, James misrepresented her Virginia residence as a primary home, while Schiff allegedly made false claims about his major residences in Maryland and California.
All three—Cook, James, and Schiff—have adamantly denied any wrongdoing and have not been charged. A Justice Department source is handling the investigation into these mortgage fraud claims against public officials.
The legal standards regarding false statements are high; the prosecution must demonstrate intentional deception on the part of the accused.
“Intent is a key aspect of fraud,” explained a law professor at Columbia University. “There’s a significant distinction between accidental misrepresentation and deliberate deceit.”
Prosecutions for mortgage fraud are quite rare, with only a small number of offenders convicted in recent years.
At present, accusations against Cook are entwined with the ongoing dispute about the legality of Trump’s move to dismiss her from the Fed Board.
In an announcement earlier in the week, Trump stated that Cook’s alleged involvement in mortgage fraud constituted valid grounds for her dismissal, as the Federal Reserve Act permits removal only for “cause.”
Cook’s attorney countered this claim, arguing that such allegations were insufficient for termination.
The court hasn’t fully assessed what qualifies as “cause” within the context of the Fed, but the attorney said, “It certainly isn’t this.”
Furthermore, the Justice Department has argued that conflicting statements in financial documents could provide a valid basis for removing senior officials. However, Cook’s attorney asserted that she was not given a fair chance to defend herself before her dismissal.
The judge noted the tenuous nature of claiming that mortgage fraud alone justifies termination, especially since it isn’t directly related to Cook’s role. Still, it raises significant questions about her integrity.
Pulte has initiated multiple referrals concerning mortgage fraud since Cook’s case, and has emphasized that his focus is on pursuing fraud across political lines.
Nonetheless, he hasn’t highlighted similar allegations against prominent Republicans, such as Texas Attorney General Ken Paxton, a Trump ally, who is also accused of designating three homes as primary residences without any current investigations known.
Discussions around the identification of potential mortgage fraud cases and the apparent prioritization of such investigations continue to unfold.
In a recent interview, a critic of Trump claimed that some of these investigations appear tailored to undermine opponents, labeling accusations of mortgage fraud as a new tactic to pursue critics.
