The Mortgage Fraud Cases

With Wednesday's news of President Trump calling on Federal Reserve Bank Governor Lisa Cook to resign following a criminal referral to the Justice Department for mortgage fraud, there are now three high-level figures accused of the same crime, declaring two separate homes their primary residence to get favorable interest, tax, and insurance rates. On Fox News, Kennedy interviewed legal commentator Horace Cooper specifically on Sen Schiff's predicament, but his comments in the clip embedded above apply just as much to the other two:

This type of fraud is fairly common, and it is frequently prosecuted. In fact, the real challenge here is how will the senator find an easy way out. 18 US 1001 says that you can't lie, in writing or in your application, and 1014 says that you can't lie on your application. Once you've actually done that, and there's a five-year statute of limitations, unless that is extended by ongoing carrying-out activities to promote the original crime, that means he's still under the statute of limitations, and the defenses are fairly limited. It's actually time to hire a really good lawyer to negotiate some sort of plea agreement. It's gonna be very hard to get out of this.

It does appear that Schiff, at least, has recognized his situation is serious, although he has additional legal problems as well:

California Democratic Sen. Adam Schiff, a longtime adversary of President Donald Trump, has formed a legal defense fund, amid the Justice Department probe into his finances.

. . . Trump specifically alleges that Schiff illicitly claimed his primary residence was Maryland for financial benefit, and his administration has tapped Ed Martin — now pardon attorney and director of DOJ’s Weaponization Working Group — to oversee the matter.

. . . FBI Director Kash Patel, who was once a House Intelligence Committee staffer working to undermine the investigation into election interference, has also released materials that suggests the California Democrat supported leaking information during his time on the House Intelligence Committee to damage the president’s reputation.

However, his new counsel, Preet Bharara, former US Attorney for the Southern District of New York, has so far only complained that the action represents “the very definition of weaponization of the justice process.” The question remains how to find his client an easy way out.

New York Attorney General Letitia James faces similar allegations:

[Federal Housing Finance Agency Director William Pulte] alleges James may have falsified her residence status at a home in Norfolk, Virginia, to get a better mortgage rate.

According to Pulte, in 2023 James granted Shamice Thompson-Hairston power of attorney to make the Norfolk property, purchased in August of that year, her "principal residence," despite James actually living and serving as attorney general in New York at the time.

"At the time of the 2023 Norfolk, VA property purchase and mortgage, Ms. James was the sitting Attorney General of New York and is required by law to have her primary residence in the state of New York — even though her mortgage applications list her intent to have the Norfolk, VA property as her primary home," Pulte wrote.

According to Pulte, in 2023 James granted Shamice Thompson-Hairston power of attorney to make the Norfolk property, purchased in August of that year, her "principal residence," despite James actually living and serving as attorney general in New York at the time.

"At the time of the 2023 Norfolk, VA property purchase and mortgage, Ms. James was the sitting Attorney General of New York and is required by law to have her primary residence in the state of New York — even though her mortgage applications list her intent to have the Norfolk, VA property as her primary home," Pulte wrote.

. . . Pulte also alleges James bought a five-family property in Brooklyn in 2001 with a loan that is only available for homes with four units or less.

. . . It's also alleged James and her father signed mortgage documents in 1983 stating they were husband and wife.

If James is still receiving financial benefits from these transactions, the statute of limitations would not apply. It's worth noting that via the New York state machine, James is expecting to have her legal expenses paid out of the state budget:

Albany Democrats are expected to sign off on a provision allowing certain officials to tap into a $10 million fund to cover “any reasonable attorneys’ fees and expenses incurred” — even as part of probes not directly related to their state employment.

The language is being slipped into New York’s operations budget bill — one of several expected to be made public and voted on starting Wednesday as the Legislature moves to pass next year’s fiscal plan.

Multiple sources told The Post that the specific language in the bill would apply to James’ looming legal fight.

She has already hired Abbe Lowell as her defense counsel, best known lately for last year's losing battles on behalf of Hunter Biden.

The most recent case stems from a letter of referral FHFA Director William Pulte sent to the Justice Department over Federal Reserve Governor Lisa Cook:

He said Cook had designated a condo in Atlanta as her primary residence after taking a loan on her home in Michigan, which she also declared as a primary residence.

. . . Cook’s federally filed financial disclosure documents show three mortgages taken out in 2021, including a 15-year 2.5% loan on an investment property and two loans for personal residences, including a 30-year 3.25% mortgage and a 15-year 2.875% mortgage.

The weekly average rate for 30-year loans during 2021 ranged between 2.9% and 3.3%, Mortgage Bankers Association data shows.

The immediate question for Cook isn't criminal prosecution, but whether she should remain in her position as Fed governor. The Kansas City Fed president seems to be suggesting it's OK, because the application was too complicated for her to fill out correctly:

What a weird response pic.twitter.com/YNIEcWKvYM

— Pulte (@pulte) August 21, 2025

However, as of this morning, Trump has warned that

"I'll fire her if she doesn't resign," Trump told reporters on Friday. "What she did was bad, so I'll fire her if she doesn't resign."

. . . On Wednesday afternoon, Cook said in a statement, "I have no intention of being bullied to step down from my position because of some questions raised in a tweet. I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

She'll need to do this quickly if she wants to keep her job. Still, whether Trump can fire her is a new question:

The only way for Trump to fire a Fed governor is “for cause,” according to a 1935 law. That standard has generally been interpreted to mean dereliction of duty or malfeasance. The Supreme Court suggested in May that Federal Reserve employees were protected under the law. In that ruling, the court said the Fed was different from other agencies because it “is a uniquely structured, quasi-private entity,” suggesting that Fed officials lie beyond Trump’s reach.

Columbia University law professor Lev Menand said it isn’t clear whether any alleged malfeasance that happened before an official takes office would be a legally sufficient reason to fire Cook. “I think prior private misconduct would be a stretch,” he said.

However, it seems to me that if she's continuing to benefit from that misconduct by getting lower interest, tax, and insurance rates on both properties, ths isn't just a question of past misjudgment.

It does look like the seriousness of her situation is dawning on Cook only very slowly -- she seems to assume that she can bargain for an indefinite amount of time to gather accurate information that could acquit her, but in reality, as both Schiff and James have already done, she needs to hire an experienced defense attorney who can address these problems on her behalf. Being fired or suspended is only the first part of her problem.