NY Attorney General Letitia James, a Trump adversary, pleads not guilty to mortgage-related charges

By Andrew Goudsward and Sarah N. Lynch

NORFOLK, Virginia (Reuters) -New York Attorney General Letitia James, a longtime critic of President Donald Trump, pleaded not guilty in federal court on Friday to charges related to allegedly lying on mortgage documents.

James, a Democrat who last year secured a $450 million civil fraud judgment against Trump, is one of three perceived enemies that the Republican president’s administration has brought criminal charges against in the past month, along with former FBI Director James Comey and former National Security Adviser John Bolton. All three have denied wrongdoing.

Appearing before a federal judge in Norfolk, Virginia, James said: “Not guilty, judge, to both counts.” A trial set was set for Jan. 26, 2026.

Outside of the federal courthouse, supporters of James gathered with signs where they chanted: “Hey hey! Ho ho! Let Letitia James go!” and “This is what democracy looks like.”

In a fiery speech, a defiant James thanked the crowd for their support after she exited the courthouse.

“This is not about me,” she said. “This is about all of us. About a justice system which has been weaponized. A justice system which has been used as a tool of revenge,” she said.

“So there’s no fear today,” she said, as the crowd chanted back: “No fear!” 

“I believe justice will rain down like water and righteousness like a mighty stream,” James said.

Trump has promised to seek retribution against people he alleges used the justice system against him in an effort to prevent him from returning to power. He pressured Attorney General Pam Bondi to speed up the action, and replaced the prior U.S. attorney overseeing the James and Comey cases with a loyalist after that lead prosecutor expressed concerns with the strength of the evidence in both matters.

Two other Trump rivals – Democratic Senator Adam Schiff and Federal Reserve Board Governor Lisa Cook – remain under criminal investigation and have also denied wrongdoing.

More than half of Americans, including about one in three Republicans, believe Trump is using federal law enforcement to target his enemies, according to a Reuters/Ipsos poll this month.

TARGETED TRUMP’S ASSETS

James last year won a $454.2 million penalty against Trump after a judge found he fraudulently overstated his net worth to dupe lenders. A New York state appeals court in August threw out the penalty, which had grown to more than $500 million with interest, but upheld the trial judge’s finding that Trump was liable for fraud.

Both Trump and James’ office are appealing to the state’s highest court.

A source familiar with Trump’s thinking said that Trump’s anger towards James is particularly acute because of the challenges he faced when he struggled to secure a bond to cover the judgment, putting him at risk of having his assets seized.

James became a Justice Department target after Trump ally Bill Pulte, who leads the Federal Housing Finance Agency, made a criminal referral that raised questions about whether James lied on her mortgage applications in order to obtain a more favorable interest rate.

That sort of case is rarely prosecuted by the federal government, a Reuters analysis of eight years of court records showed. 

The charges against James focused on a property that she bought in Norfolk, Virginia, in 2020 for around $137,000, not one of the two Pulte initially raised questions about.

The indictment alleges that James falsely told the bank she would occupy the residence as a second home, when she actually used it as an investment property. This alleged misrepresentation allowed her to receive a favorable interest rate that saved her nearly $19,000 over the life of the loan, the indictment says.

James faces two criminal counts, bank fraud and making a false statement to a financial institution.

James’ legal team is seeking to have the charges thrown out on the grounds that U.S. Attorney Lindsey Halligan, the prosecutor Trump appointed to lead the case, is unlawfully serving in the role. Comey has made similar arguments in his case, and both challenges to her appointment will be consolidated into one. 

A hearing on those challenges will be held in Alexandria, Virginia, on Nov. 13. The challenge to Halligan’s appointment is being heard by a South Carolina-based federal judge to avoid any appearance of a conflict of interest.

Abbe Lowell, James’ lead attorney, told the court on Friday that he also anticipates filing motions seeking to dismiss the charges on the basis of vindictive, and possibly also selective, prosecution. Comey’s legal team has also made similar arguments in his case.

He also told the judge that her legal team may file a motion claiming that the charges against her do not match with what is alleged in the indictment, though he did not elaborate further.

In an unusual move, an attorney who normally handles civil litigation from a U.S. attorney’s office in Missouri, will be handling the case along with Halligan, after prosecutors in Halligan’s Virginia office expressed skepticism about the James case. 

U.S. District Judge Jamar Walker, who was appointed by former Democratic President Joe Biden, will hear the case.

(Reporting by Sarah N. Lynch in Washington and Andrew Goudsward in Norfolk, Virginia; editing by Scott Malone and Nick Zieminski)