President Trump has found a new weapon of choice in his retribution campaign against his foes: mortgage fraud claims.
At least three prominent Trump adversaries have been targeted with Justice Department probes into their personal real estate dealings.
The president most recently pointed to allegations against Federal Reserve board of governors member Lisa Cook to justify his effort to fire her. She has already challenged the move in court as “unprecedented and illegal.”
New York Attorney General Letitia James (D) and Sen. Adam Schiff (D-Calif.) face investigations tied to their mortgage records, as well.
The mortgage fraud claims originated with the Federal Housing Finance Agency (FHFA), whose director, Bill Pulte, filed criminal referrals suggesting they may have illegally designated multiple homes as primary residences for lower interest rates and favorable loan terms.
Cook’s Aug. 15 referral alleges that, weeks apart in 2021, she wrote in mortgage documents for properties in Michigan and Georgia that each was her “principal residence.” In 2022, she listed the Georgia property for rent, the referral says.
Pulte said the Fed board member may have violated criminal statutes from bank fraud to making false statements to a financial institution, urging the Justice Department to consider prosecution.
On Thursday night, he said he filed a second criminal referral for Cook, alleging she represented a third property as her “second home,” despite referencing it in other government documents as an investment or rental property.
“3 strikes and you’re out,” the FHFA director said.
Similar are the criminal referrals for James and Schiff.
Pulte alleged that James claimed a Virginia home as a primary residence while holding public office in New York and residing there and that Schiff claimed principal residences in Maryland and California.
Cook, James and Schiff have denied wrongdoing and have not been charged. Ed Martin, a Justice Department official, is investigating the cases as a “Special Attorney addressing mortgage fraud by public officials.”
The statutes referenced in the referrals set a high bar for prosecutors, should they seek to indict. The government would have to prove the Trump rivals not only made false statements but did so knowingly, intending to deceive.
“Intent has always been a core element of fraud,” said Kathryn Judge, a professor at Columbia Law School focused on financial regulation. “We say and do things all the time that might or might not be accurate, even in the context of legal proceedings, and so, there’s a difference between making an inadvertent misrepresentation and engaging in an intentional misrepresentation.
“And absent that intent, it’s not fraud,” she added.
Mortgage fraud convictions are relatively rare, as is.
Only 38 mortgage fraud offenders were sentenced in the federal system in the 2024 fiscal year — an increase from the year prior, which saw 34 sentencings, but down from all other years in the dataset, according to United States Sentencing Commission’s interactive data analyzer.
For now, the allegations against Cook are confined to a legal battle over whether the president can lawfully remove her from the Fed’s governing board.
Trump announced Cook’s dismissal Monday, citing the mortgage fraud allegations as “cause” for her removal. The Federal Reserve Act says the president can only remove members of the governing board “for cause.”
At a hearing Friday, Cook lawyer Abbe Lowell rejected the notion that the mortgage fraud allegations were sufficient cause to fire her.
Though the courts have never weighed exactly what constitutes cause in the context of the Fed — because no president has sought to remove a Fed governor, until now — Lowell said that “whatever it is, it’s not this.”
“You can’t have Director Pulte’s crazy midnight tweets be cause,” the lawyer said.
The Justice Department argued in court papers that making contradictory statements in financial documents is “more than sufficient ground” for removing a senior financial officer — no matter whether a criminal burden of proof could be sustained.
On Friday, DOJ lawyer Yaakov Roth emphasized that Cook still has not explained the seemingly contradictory documents underpinning the mortgage fraud allegations. But Lowell contended she had no meaningful chance to contest them before Trump moved to fire her.
Judge, the Columbia law school professor, said the notion that mortgage fraud suffices for cause is “a stretch,” given it is not directly tied to her role on the board. However, it also amounts to “meaningful allegations of misbehavior” that could be relevant to perceptions of her integrity, she said.
“So, that’s going to be a challenging issue for the courts to figure out,” Judge said.
Pulte has made at least four mortgage fraud referrals since Cook’s, according to statements he’s made online, though nothing he said indicates those referrals involve left-wing figures.
The FHFA director has rejected the notion he’s focused his efforts only on the president’s political opponents.
“Contrary to what the fake news media says, US Federal Housing FHFA has criminally referred people of each political parties and various ethnicities as we are focused on prosecuting mortgage fraud out of our system,” he wrote on X Tuesday.
However, Pulte has not drawn public attention to prominent Republicans who have faced similar allegations.
The New York Times reported in July that Texas Attorney General Ken Paxton (R), a Trump ally and U.S. Senate candidate, designated three homes in the state as primary residences in mortgage documents. No plans to investigate Paxton have been made known.
The Hill requested comment from the FHFA regarding its process of identifying possible mortgage fraud offenders and whether rooting them out has become a new priority for the agency.
Schiff slammed the focus on the personal real estate dealings of Trump’s critics Sunday on NBC News’s “Meet the Press,” accusing Pulte of “essentially doing the president’s bidding” against himself, James and Cook.
“Mortgage is their new weapon to go after their critics,” the senator said.
