The Justice Department failed Thursday to obtain a new indictment against New York Attorney General Letitia James after a judge dismissed the previous mortgage fraud prosecution that was pursued amid pressure from President Donald Trump, people familiar with the matter said.
Prosecutors returned to a grand jury in Virginia after a judge halted the earlier case — which also targeted former FBI Director James Comey — on the grounds that the U.S. attorney who presented the cases was illegally appointed. Grand jurors declined to bring charges this time.
Officials said prosecutors plan to seek an indictment again, according to one person who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.
James was initially charged with bank fraud and making false statements to a financial institution over her 2020 purchase of a home in Norfolk, Virginia. Lindsey Halligan, a former White House aide and Trump lawyer, personally presented the matter to a grand jury in October after she was installed as U.S. attorney for the Eastern District of Virginia amid pressure from the president to prosecute Comey and James.
James has denied any wrongdoing and called the prosecutions political retaliation. In a statement Thursday she said, “It is time for this unchecked weaponization of our justice system to stop.” Her lawyer, Abbe Lowell, said: “This should be the end of this case. If they continue, undeterred by a court ruling and a grand jury’s rejection of the charges, it will be a shocking assault on the rule of law and a devastating blow to the integrity of our justice system.”
Prosecutors allege that James signed a standard “second home rider” during the sale agreeing to use the Norfolk property primarily for personal use for at least a year unless the lender agreed otherwise, but instead rented it out, allowing her to obtain loan terms that are not available for investment properties.
Grand jurors’ refusal to return an indictment is notable amid a spate of recent setbacks for the Justice Department since the start of Trump’s second administration. It is rare enough that prosecutors have long joked they could get a grand jury to “indict a ham sandwich,” but several high-profile cases have met resistance in recent months.
Even if federal charges are refiled, prosecutors could face obstacles securing a conviction. James’ defense has argued the case is vindictive prosecution aimed at punishing a critic of Trump who investigated and sued him for allegedly misleading banks about his real estate holdings; that lawsuit produced a large judgment that was later overturned by a higher court, and appeals are ongoing. Defense lawyers also argued that “outrageous government conduct” surrounding the indictment warranted dismissal; the judge had not ruled on those claims before dismissing the case over the appointment issue.
U.S. District Judge Cameron McGowan Currie criticized the method used to install Halligan as U.S. attorney for the Eastern District of Virginia. Halligan was named to replace Erik Siebert, an interim U.S. attorney who resigned in September after facing pressure from the administration to bring charges against Comey and James.
The night after Siebert’s resignation, Trump said he would nominate Halligan as interim U.S. attorney and urged then-Attorney General Pam Bondi to act against his political opponents, saying on Truth Social: “We can’t delay any longer, it’s killing our reputation and credibility” and “JUSTICE MUST BE SERVED, NOW!!!”
Comey was indicted three days after Halligan was sworn in by Bondi; James was charged two weeks later. The Justice Department defended Halligan’s appointment but disclosed that Bondi had given Halligan a separate title of “Special Attorney,” apparently intended to shield the indictments from collapse — a retroactive designation Judge Currie said could not save the prosecutions.
Richer reported from Washington.