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The critical point you are ignoring is that Trump was guilty, but James appears to be innocent. The behaviour she has been indicted for is applying for a mortgage on the basis that the house on Peronne Avenue would be a secondary residence when she was in fact intending to rent it out. James claims that she allowed a family member to live in the house in exchange for a small contribution to utilities and maintenance, and that she accurately described her plans to the bank. If James is telling the truth, then no crime. The evidence that would allow me to determine who is telling the truth here is not public, but we do know that the career AUSAs assigned to prosecute the case declined to do so, and that the Trump-appointed US Attorney resigned rather than overruling them.
AFAIK, no President of the United States has previously ordered the malicious prosecution of someone they should have known was innocent.
As an entirely separate point, this is a problem. Primary residence fraud is not victimless - among other things it defeats the homeownership-promotion mission of Fannie and Freddie. But because it is almost never prosecuted it appears to be common.
Here are some excerpts from the indictment document:
So my first question to you is this: Do you accept that these are substantially accurate descriptions of the documents that James signed?
This raises a couple questions:
So in your view, it doesn't count as "renting" if you allow a family member to live in a property in exchange for a modest, below-market payment?
Do you normally assign a person's self-serving uncorroborated claims regarding their alleged wrongdoing enough credibility to conclude that the person "appears" to be or is "known" to be innocent?
Can you show us the documents that James signed?
Apparently, yes. Because apparently it's a standard form - the FNMA second home rider.
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The other point is that this was economically a second home transaction, not an investment - James's motives for buying the house and allowing her relative to live in it were personal and not commercial, and she was paying the mortgage out of her own resources, not the rent. The business reason for charging a higher interest rate on investment mortgages than second homes is that
The first of these is the key one - in the UK you get "second home" pricing on a mortgage if you can qualify based on non-rental income, regardless of who is occupying the property. This doesn't change the fact that James is guilty if she misrepresented her plans for occupancy, but it is relevant to the plausibility of her story that she was honest about what she was doing with the lender and they agreed to underwrite the loan as a second home anyway.
I tend to disagree with this. The documents apparently includes the following language:
It seems to me that allowing others to be the primary occupants of the house is not consistent with this language.
So if I understand you correctly, your argument is as follows:
A career prosecutor and a Trump appointee declined to pursue the case.
It follows that those officials determined that the case was meritless.
If the case is meritless, it's because there is corroborating evidence for James' claims about the intended use of the property.
Does that pretty much sum up your argument?
Also, I had a couple other questions:
Regarding Trump's alleged wrongdoing in the civil case against him, you said:
Are you able to identify 2 or 3 precedents for similar legal proceedings against ordinary citizens from the last 20 or 30 years?
Also, you said this:
Of these cases, which would you say was the most egregious case with the most unquestionable guilt? I am asking because I would like to look at it more carefully.
Not the OP, though I'll tag @MadMonzer, but I am an attorney and there are a few things here that we need to clear up. There are three categories of mortgages: Primary residence, second home, and investment. We can forget about primary residence since nobody is claiming that this was a primary residence. The question we are therefore dealing with is whether this is a second home or an investment property; there are no other categories available.
Primary residences get the most favorable treatment. Correspondingly, the most common type of mortgage occupancy fraud is mischaracterizing an investment property as a primary residence. Second homes carry higher interest rates than primary residences; if you fall on hard times you're going to prioritize keeping a roof over your head over making payments on the ski condo. Investment properties traditionally carried even higher interest rates (note the past tense) because, as investments, the borrower's ability to repay is often contingent on the success of the business. The disadvantage of the higher interest rates and down payments was offset by the ability to use projected income off the property to qualify for the loan. The risk to banks of mischaracterizing an investment property as a primary residence or second home was that the bank wouldn't be properly pricing in the additional risk profile of the borrower, who may be able to afford the property on paper but may in fact be relying on rental income to make the payments.
Keeping that in mind, there are two critical weaknesses to the prosecution's case. The first is that they have to prove that James knowingly and intentionally made a misrepresentation to bank officials. The only evidence they have of this is her signature on a boilerplate rider that was signed at the closing along with a sheaf of other documents. Anyone who has ever purchased a home, including the people who will be on the jury, knows that the documents you sign are selected by the bank based on their understanding of the situation. The borrower isn't drafting these things themself and presenting them to the bank as representations. They are simply memorializations of what is already understood. In other words, everyone on the jury is going to understand that the bank included that rider based on conversations they had with James regarding the use of the property.
If have read that the investigators uncovered witnesses who corroborate James's story that she was forthright about what she wanted to do with the property. Unless the prosecution can produce someone from the bank who is willing to testify otherwise, this case is dead in the water, and even if they do produce such a witness, it muddies the waters but doesn't necessarily mean there's enough to convict. One guy who doesn't remember something that five other people remember isn't going to move the needle much, unless that one guy was in a better position to know. I haven't been able to find details about this evidence, so tke this with a grain of salt, but assuming it does exist, it more or less ends the prosecution right there unless they have something big.
Even without this evidence, though, the case still isn't a slam dunk. Fraud is unusual in the criminal world in that the intent requirements are very specific, and honest mistake is a defense. If nothing was said about the use of the property other than the signed rider, and the decision to use that particular rider was entirely on James, she could credibly argue that she didn't represent the property as an investment property because it wasn't an investment property and was never intended to be. This is supported by the evidence, considering that her proceeds from the deal have thus far amounted to $1,300 in 2020 and nothing since.
But even going beyond that, if we assume that indeed she did intentionally make a misrepresentation to the bank, for it to be fraud that misrepresentation has to be material. Say you're buying a used car from a private seller. Certain things would be material to your decision to purchase: Age, mileage, accident history, repair history, etc. Suppose the seller claims he drove it cross-country last year and everything went well, and you found out later that this was a lie. He may have intentionally lied to you in order to mislead you into believing that the car was more reliable than he had any reason to believe it was, but if this statement didn't influence your decision to buy the car, there's no fraud. The upshot for James is that she doesn't even need witnesses to remember conversations from five years ago, only witnesses who will testify that if they had known about her true intentions at the time it wouldn't have changed anything.
There's another aspect to materiality that goes to a similar defense; while showing lack of financial benefit isn't a great defense in the sense that it doesn't negate an element of the offense, juries in general are unlikely to convict for fraud if the alleged perpetrator didn't benefit from the lie, or if the benefit was minimal. The two benefits one gets from classifying a property as a second home as opposed to an investment property are a reduced down payment requirement and reduced interest rates. The reduced down payment isn't a factor here because James put the same amount down as she would have on an investment property. The only possible motivating factor was the reduced interest rate. A representative for the bank told investigators that had the property been classified as an investment it would have increased the interest rate by a quarter point to a half point. One thing that hasn't been covered much, though, is how little money is involved. This house sold for $137,500. She put 20% down. Classifying it as an investment property would have cost James an extra $15–$30/month. These are not exactly the kinds of benefits one typically makes intentional misrepresentations over.
The Justice Department tried to dress this up as best they could and claimed that she defrauded the bank out of more than $17,000 over the 30-year life of the loan, but this is disingenuous. First, they didn't like the number the guy from the bank she actually used gave them, so they got another expert to testify to the grand jury that the rate increase would be closer to 0.8%. Then rather than use an average length that one would expect her to own the property, they assumed that she would live to age 92 and wouldn't sell, die, refinance, or pay off the mortgage in the meantime. They also assumed that a dollar in 2050 would be worth the same as a dollar in 2020; they should have applied a discount rate based on expected inflation.
All of that is before we even get to whether she violated the terms of the rider itself, which it is not clear that she did. The first thing the rider requires is "Borrower must occupy and use the Property as Borrower’s second home." Unfortunately, neither the rider nor the Federal mortgage regulations define any of the operative words including "occupy", "use", and "second home". A gander of the 1983 edition of Black's Law Dictionary in my office doesn't define "second home" but defines "occupy" and "use" in general terms suggesting some sort of control but without imposing any specific requirements that would be relevant here. Luckily, we can look at the rest of the language to get some clues as to what this means.
The next section states "Borrower will maintain exclusive control over the occupancy of the Property, including short-term rentals, and will not subject the Property to any timesharing or other shared ownership arrangement or to any rental pool or agreement that requires Borrower either to rent the Property or give a management firm or any other person or entity any control over the occupancy or use of the Property". Now we're getting somewhere! I flesh this out in another comment, but if you've ever rented a vacation property, you probably haven't dealt with the owner directly. The way this is typically done is the owner enters a management contract with a rental company that handles the business end of things including marketing, payments, repairs, cleaning, booking, etc. in exchange for a hefty percentage of the rental price. They aren't going to enter such a contract without access to the most profitable days in peak season, so the owner's ability to use the property himself under these contracts is often limited to a couple selected weeks during the offseason.
A guy I went to law school with bought such a property near a lake that he let the group I was with stay in for free a couple times for bachelor parties. By "free" I mean that he charged us $500/night; he wasn't getting anything himself, but there was a minimum "friends and family" rate that the rental company required him to charge to cover the costs of having the house occupied. Everything was still handled through the rental company, even though we knew the owner. In other words, the type of occupancy the clause requires is more of a constructive occupancy than a physical presence. James did not delegate the rental of the property to a third party; any agreement she made was directly with the occupant. She had control over whether her grandniece could stay there. People elsewhere have mentioned that the occupant was subject to eviction laws, but this isn't dispositive. While eviction proceedings can be drawn out, the arrangement James had was a tenancy at suffarance under Virginia law (no written agreement, no rent paid), and the tenant was only due three days notice.
The relevant part of the clause concludes "Borrower will keep the Property available primarily as a residence for Borrower’s personal use and enjoyment for at least one year after the date of this Security Instrument...." Again, we have language that implies a requirement of control, not of actual possession. There is no requirement of any particular personal use, only that the property is kept available for such use. Aside from the minimal three day notice requirement mentioned above, there is nothing that would have precluded James from using the property while her grandniece was living there. When a landlord and tenant enter into a normal lease, the lease typically precludes the landlord from entering the property except in specific situations; he can come in if he needs to fix something, but not just to hang out. People living in the homes of relatives for free without written lease agreements do not enjoy these same privileges. Ask any 23-year-old who moved back in with his parents after college if he can limit their use of the property. Even if they spend most of the time at their condo in Myrtle Beach.
Even still, several witnesses told investigators that James did use the property when visiting family in Virginia, though she did not stay at the house overnight. Prosecutors seized on this as evidence that she did not occupy the property, but this is a rather specious argument. It's already ambiguous at best whether the language in the rider actually requires the borrower to be present on the property at all. But they want to read into the statute a requirement that a certain number of overnight stays are required. They also want to extend the damage period to the entire 30 year term of the mortgage, even though the restrictions are only in operation for one year, consistent with the idea that someone relying on rental income wouldn't be able to afford to wait a year before leasing the property. the $17,000+ they want to claim she defrauded the bank of goes down to $10,800 if you use the bank's actual high-end numbers, which goes down to $5,400 if you use the bank's actual low-end numbers, which goes down to $800 when you realize that they can only claim the first year of payments as damages (the math is goofy since the amortization schedules are front-loaded).
As for how this compares to Trump, he was charged with hundreds of instances of misstating property values to obtain favorable mortgage terms. Yes, there's some uncertainty with regard to valuations, but he did stuff like inflate square footage and factor in potential development that was prohibited by deed restrictions. And this wasn't a one-time occurrence but a pattern of behavior that went on over years. He saved hundreds of millions of dollars in interest fees. And with his organizations going into bankruptcy six times over the years, he wasn't exactly a low-risk borrower. The fact that he made intentional misrepresentations of material facts in order to achieve a significant financial benefit was undisputed, even by his supporters. The argument was simply that because he paid the money back, no harm, no foul. Well, notice that in the preceding 2,000 words I made no mention at all of the fact that James (presumably) paid the money back according to the terms of the loan. I don't even know if she did, because it isn't relevant. And neither is the fact that this isn't usually prosecuted, another typical Trump defense line.
One final thing I would caution. Remember how back at the beginning I said that the past tense was important? Well, that's because second home mortgages don't get preferable treatment anymore as compared to investment properties. It used to be that using a rental company was the only way to consistently guarantee short-term rental income, and their use was barred by the rider, and a contract with one significantly curtailed the owner's rights to control the property. Then Airbnb came along, and it quickly became relatively easy for the aspiring investor to get significant short-term rental income while maintaining control of the property. Since Airbnb doesn't really have to do anything other than act as a marketing platform and handle payments, they aren't going to insist on a great deal of control. If you only want to rent the place out for a few weeks in the shoulder months, that's okay. If you decide after the first rental that allowing strangers on your property isn't for you, that's okay. Listing your second home on Airbnb didn't violate any explicit prohibitions. But banks weren't stupid, and realized that the opportunity afforded by the short-term rental platforms greatly increased the number of people who were interested in "second homes". The upshot was that when it becomes hard to tell who is relying on rental income and who isn't, everyone pays the higher rates, and the advantage of a second home classification disappears.
If the prosecution's interpretation wins the day, the Democrats can easily take this ball and run with it. The practice of buying Airbnbs for investment purposes and getting second home mortgages on them was widespread between 2019 and 2022, when banks raised second home rates to curtail the practice. Such fraud was much more apparent and easy to prove than whatever it is they're accusing James of, and it shouldn't be too hard for FHFA to cross-reference a list of second home mortgages with a list of Republican donors from swing states and swing districts. You can argue that James's suit against Trump was politically motivated, but at least she had the courtesy to pick something that only a guy like Trump would be guilty of. Trump just gave a future Democratic administration license to run roughshod over a not-insignificant percentage of the donor base. Claim it's politically motivated. Claim a huge scandal. Fine. James is doing the same thing and it's getting her nowhere; only vindication that she didn't violate any actual laws will get her off the hook. My reaction to such a series of events would be one of satisfaction. If Republicans want to pretend that this is actually a Serious Crime that needs to be prosecuted, then their own tribe can pay the price for their indiscretions. The Republicans can feel free to do the same once they get back in power, except the statute of limitations will be up by that point on the period where misclassification made sense. I guess you can't win them all.
I was skeptical of these claims, so I looked up the statutes involved (18 USC Section 1344 and 18 USC Section 1014).
First, it seems that for both of these statutes, the applicable mens rea requirement is "knowingly" -- not "knowingly and intentionally"
Second, I searched for pattern jury instructions from the 4th Circuit. I found South Carolina (which is obviously not Virginia) but I doubt there's much of a difference. Here are some excerpts from the jury instructions:
https://www.scd.uscourts.gov/pji/patternjuryinstructions.pdf
Would you agree that these pattern jury instructions seem to contradict your claims, as an attorney?
I am curious about this, would you mind providing a link?
As a side note, I am really curious to see whether James claimed tax benefits as though the property were an investment property.
Perhaps, but if James visited sporadically while someone else lived there on a continual basis, that's not "available primarily as a residence for Borrower’s personal use and enjoyment" The house is primarily available for some other use, agreed?
Well do you agree that she received more favorable terms than she would have if the property had been categorized as an investment?
If by "license" you mean that future Democrats will feel justified in escalating further, then yes, that's a valid concern. Although in practice, I would imagine that they would primarily target leaders on the other side. But yeah, that's part of what was so troubling about James' activities. They invite reprisal, which invites further reprisal, and so on.
Agreed, although you can almost always find SOMETHING to use against someone.
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I'd suggest a possible alternative reason for why prosecutors might want to avoid prosecuting James regardless of the merit of the case: the standard that it establishes exposes them. James is a prosecutor. You're a prosecutor. James did politically motivated prosecutions of your boss. Your boss asks you to prosecute her in retaliation. What's gonna happen to you in 4-8-12 years when the political pendulum swings? You've just walked directly in front of the crosshairs. In contrast, you know your boss' reputation, if you refuse he'll fire you, he might badmouth you a bit, but if you lay low and shut your mouth afterwards, he's not gonna come after you.
What do you think this is?
Democrats laughed and applauded when Barak Obama "joked" on late nite TV about sicing the FBI and IRS on his critics, and dismissed the scandal as a "nothingburger" when it was revealed that he wasn't joking.
While a lot of Trump's supporters wanted to see Clinton, Comey and a lot of other senior Democrats prosecuted, Trump notably did not do this in his first term.
Democrats subsequently elected Letitia James, in part, on the premise that politically motivated prosecutions are a good thing that America needs more of.
Letitia James and her defenders are like an adult dog that was never house broken. They are never going to learn that what they have done is wrong if you don't grab them by the scruff of the neck and shove their face in it.
The Democrats as a people need to be taught that politically motivated prosecutions are going to blow-back on them in 4-8-12 years when the political pendulum swings, and that is what the Republicans are currently doing.
Yeah, but by asking them to be the instrument to teach this lesson, you're asking a lot personally from Republican-aligned prosecutors, you're asking them to make themselves a named, direct target for the next cycle. You're asking them to stand up to draw enemy fire. James probably felt safe because she thought that Trump would not come back and that the next Republican administration will want to distance themselves from Trump and so they wouldn't retaliate on his behalf. But I don't think any Republican-aligned prosecutor can feel quite so confident that the Democrats are not going to get back into power before this fades from memory, and that they will not be in a revanchist mood.
... there's a fun story from the criminal justice sphere, and by fun I mean incredibly depressing.
It's an old Freakanomics bit that drug dealers don't actually make that much money, but despite being in Freakonomics, it's actually true. The distribution agents and runners make peanuts, even mid-level dealers that handle a lot of cash end up spending a lot of that to replace stock, and you have to get real close to the top of the chain to break into high five figures or low six. Now, admittedly, that's tax-free and you don't have to deal with McDonald's customers, but there's a whole new level of problem when 'can't leave work at work' goes from late-night on-call to slightly more energetic concerns, whether from police or from other criminals.
Why would people accept a risk of 45 calibre wakeup calls for less than they could make sllepping fries ends up one of the big driving questions for criminology, and unfortunately there's a ton of different partially-right answers : lack of access to conventional employment, cycles of poverty, casual users making a little bit of money on the side, yada yada.
If you ask the actual people, though, a very common answer (especially once you get away from the casual users) is that they don't plan to stay at the entry-level. After all, it's not like the people at the top now have been there very long, and turnover for the mid-levels is often ridiculous. They're always hiring!
It seems stupid, from the outside view. They're jumping to get into the shoes of imprisoned (or dead) men, with at most vague motions about how they won't step into whatever trap got the immediate previous owner and not the thirty other previous owners. Maybe it is stupid.
They're still always hiring.
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This does indeed seem to be a plausible description of the thought process of these prosecutors.
If I, as a citizen, believe that this is in fact the calculus being performed by members of the executive branch, what conclusions should I draw?
I think few voters have illusions that their politicians have more loyalty to them than they have class loyalty to one another. The amount of knives buried in Trump's back attests to that.
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Trump 1 was plagued with people who didn't want to do what Trump said. He fought with Sessions trying to get him to do it and gave up after managing to get Sessions out. He said on Nov 2, 2017
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I agree that's a possibility. Another possibility is that the prosecutor simply thinks it's abuse of office to engage in politically-motivated retaliation. Even if the prosecution is in retaliation for something that itself was abusive.
Also, even if the prosecutor is not worried about being brought up on trumped-up charges down the road, he still might worry about damage to his reputation. It's very common for former federal prosecutors to end up with high-paying jobs at fancy law firms. Having been the person who prosecuted Letitia James would probably mean having to write off the possibility of future employment at 70-80% of BigLaw type firms. Perhaps more.
There's also the part where lawfare works better when the target of it actually commits a crime. It's admittedly early to tell, but Comey's trial might not go so well for the administration.
A prosecutor's job is to score a conviction. Imagine you're a prosecutor, and your boss tells you you're required to stand in front of a judge being berated because the point was just to harass a guy.
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Note the slight of hand in paragraph 6 of the indictment that you quote, emphasis added:
I assume it is not in dispute that James did not use the property as a timeshare or other shared ownership arrangement. The critical text does not prohibit James from "renting" the property, it prohibits her from entering into an agreement that requires her to rent it (or to give another control over the occupancy or use of the property). James' behavior is only violation of that paragraph if she went beyond renting and entered into an agreement with her family member that required her to to rent to them or gave the that family member control over the occupancy or use of the property.
Of course, it's also not hard to look up the standard Fannie Mae Second Home Rider which provides, in relevant part:
Another way the renting may have been legal is if the lender agreed in writing to permit her renting.
I don't know what the specific rules in New York are like, but my home state draws a clear distinction between the "property owner" and the "legal occupant". The specific phrasing is different but it is very explicitly the legal occupant not the property owner who is considered to "have control over the occupancy or use of the property".
If New York State law follows the same general framework as mine, it is the act of accepting payment that transfers legal occupancy. I've even seen cases where this was a critical point of contention. If the landlord accepts any money goods or services from the tenant after informing the tenant that they were in violation of their lease that provision becomes effectively unenforceable because the tenant is still the legal occupant.
Technically the house in question is in Virginia, but I still see a distinction between the language and your description. I don't think James contests her was the legal occupant of the property, but it's not clear to me that being the legal is the same as having control over the occupancy or use. Like, the legal owner can presumably evict the legal occupant, right? Which would seem to entail control over occupancy. Downstream of that it seems like the property owner could also lawfully restrict the legal occupants use of the property. I've had rental agreements that prohibit using the rented property for commercial purposes, for example.
Not if they have accepted payment from the tenant. The landlord does not "have control over the occupancy or use of the property" the tenant does. Now the landlord can include provisions against X Y and Z, in the text of their contract/leasing agreement and cite a breach of that agreement (including failure to pay rent) as a reason for revoking the tenant's status as a legal occupant but that is hard to do without an agreement to point to.
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What are the squatter's rights laws like in that jurisdiction?
I don't think they apply in a case where the owner is aware of and consents to an individuals occupancy.
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It may or may not align with case law, but my first reaction to this statement is observing that most states have laws on the books controlling when and how landlords renting dwellings can re-establish control of unit occupancy and use. "I have to wait several months to evict my current tenants" seems to imply that someone else has "control over the occupancy or use of the property".
For the purposes of the law in question, the prohibition on giving a third part control over the user's occupancy goes hand in hand with the prohibition on agreements that require the property to be rented out. The big issue with the "second home as investment property" fraud was people buying beach houses and the like and saying that they're second homes when they're really investment properties. One of the surest signs of this is when they contract the business end out to a rental company that markets the property, arranges the rentals, collects the money, provides a cleaning service, and does all the other things that the true owner of a non-investment second home wouldn't do. The second home policy explicitly allows for leases, though, the idea being that an owner who occasionally used the property would also occasionally lease it out when they weren't there. If they're handling this business themselves, it's likely they're doing it in good faith. If they hire a management company to do it and are only guaranteed a week a year in the offseason for personal use, then it's almost certainly an investment property.
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I am also not familiar with the case law but I would be pretty surprised if the existence of tenant protections meant that every act of renting constituted an agreement that the renter had "control over the occupancy or use of the property." That would functionally make it impossible to rent any second homes issued with conforming loans in states with such protections, which I am skeptical is how this language is understood to operate.
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Thanks for pointing this out.
I would assume that as well.
Feel free to correct me, but it doesn't seem that James ever kept the property "primarily as a residence for Borrower's personal use and enjoyment" or ever intended to do so.
Yes, if she can produce such a writing, I would say that the case is on shaky ground at best.
i suspect such a thing is unlikely to appear because the lender is probably repackaging the mortgages to fannie mae (or something similar) and that likely violates the agreement between this third party and the lender. but it might be possible someone trying to bump their numbers gave a wink to James that she could do this.
Apparently, a blogger may have originally raised the problem with James's loan and he has a write up about the ongoing court case here: https://whitecollarfraud.com/2025/11/18/letitia-jamess-motion-to-dismiss-backfires-her-own-exhibit-proves-the-fraud-she-claims-doesnt-exist/
If nothing else, it seems like the sort of thing where the lender is unlikely to want to spend time and energy writing up something like this since it makes life more complicated. Besides, I'm pretty sure that the reality of the situation is that when people plan to rent out the property, they don't bother to seek written permission. Rather they, just sign the paperwork and then do whatever they want and nobody cares. (Eventually, if there is an audit, they might have to pay some extra interest retroactively or something.) Just as I am pretty confident that in Trump's situation, it's pretty normal for people to exaggerate when describing their collateral, the bank does an independent appraisal, and perhaps they adjust the loan terms as a result.
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