President Donald Trump has intensified his campaign against political adversaries by leveraging allegations of mortgage fraud. Investigations led by the Justice Department are currently examining the real estate dealings of at least three prominent critics of the former president. The spotlight has recently turned to Lisa Cook, a member of the Federal Reserve Board of Governors, following claims that she misrepresented multiple homes as her primary residence for more favorable loan terms.
The allegations against Cook originated from the Federal Housing Finance Agency (FHFA), where director Bill Pulte has issued criminal referrals. These claims suggest that Cook designated properties in both Michigan and Georgia as her “principal residence” in mortgage applications. Notably, the referral indicates that she listed the Georgia property for rent in 2022, raising questions about her intentions. Pulte’s referral further alleges that Cook may have violated laws related to bank fraud and false statements to financial institutions.
In addition to Cook, New York Attorney General Letitia James and Senator Adam Schiff of California are also under scrutiny, facing similar investigations regarding their mortgage records. Pulte has claimed that James misrepresented a Virginia home as her primary residence while fulfilling her duties in New York, and that Schiff made conflicting claims about principal residences in Maryland and California.
Cook, James, and Schiff have denied any wrongdoing and have not yet faced criminal charges. The complexities of the allegations are being investigated by Ed Martin, a Justice Department official designated as a “Special Attorney addressing mortgage fraud by public officials.” However, it is important to note that mortgage fraud convictions are relatively rare; only 38 offenders received sentences in the federal system during the 2024 fiscal year, according to data from the United States Sentencing Commission.
The implications of these allegations are significant, particularly for Cook, who is embroiled in a legal battle regarding her status on the Fed’s governing board. On March 15, 2024, Trump announced her dismissal, citing the mortgage fraud claims as justification. The Federal Reserve Act stipulates that the president can only remove board members “for cause.” At a hearing, Cook’s lawyer, Abbe Lowell, argued that the allegations do not meet the legal threshold for dismissal, emphasizing that the courts have never defined “cause” in this context.
The Justice Department contends that discrepancies in financial documents could constitute “more than sufficient ground” for removal, regardless of whether criminal charges can be substantiated. On Friday, DOJ lawyer Yaakov Roth highlighted that Cook has not adequately addressed the contradictions in the documents related to the allegations. Conversely, Lowell asserted that Cook was not given a fair opportunity to contest these claims prior to her termination.
The legal discourse surrounding these allegations raises critical questions about the nature of intent in fraud cases. Kathryn Judge, a professor at Columbia Law School, noted that proving intent is a fundamental aspect of establishing fraud. She explained that “there’s a difference between making an inadvertent misrepresentation and engaging in an intentional misrepresentation. And absent that intent, it’s not fraud.”
While Pulte has made several referrals concerning alleged mortgage fraud, he has faced accusations of selectively targeting political opponents. He has publicly stated that his investigations are impartial, asserting, “Contrary to what the fake news media says, the FHFA has criminally referred people of each political party and various ethnicities.” Yet, critics have pointed out that prominent Republican figures, including Texas Attorney General Ken Paxton, who has faced similar allegations, have not been subjected to the same scrutiny.
Senator Schiff criticized the focus on the real estate dealings of Trump’s critics, alleging that Pulte is acting at the behest of the president. Speaking on NBC News’ “Meet the Press,” Schiff stated, “Mortgage is their new weapon to go after their critics.”
As this situation develops, the intersection of law, politics, and personal real estate dealings continues to evolve, leaving many questions unanswered regarding the motivations and implications behind these investigations. The ongoing legal battles will undoubtedly shape the political landscape in the months to come.
