She is charged with lying about her purchase of a second home in Norfolk, Virginia, in 2020. The indictment was unsealed on Thursday, sending legal wonks and citizens across America into a frenzy of activity.
The remaining allegations are tied mainly to James arranging a $2 million mortgage on the property. He then married her and signed a rider she’d be using it as her second home, which kept her from AirBNB-ing it. Prosecutors claim that she fraudulently rented out the house soon after buying it. They assert that this decision provided her a financial advantage of at least $18,933 over the life of the loan. Had the mortgage been a normal 30-year loan, James would have defrauded the federal government. Yet he would have saved them an average of about $633 each year.
Career prosecutors in the U.S. Attorney’s Office for the Eastern District of Virginia went to great lengths in evaluating the case. Instead, they concluded that there was insufficient probable cause to criminally charge James. Lindsey Halligan, the special prosecutor appointed by former President Donald Trump, assumed control of the case. Even more compelling, she pitched it to the grand jury and that earned her the indictment.
James has denied the charges against her in no uncertain terms. She stated, “These charges are baseless, and the president’s own public statements make clear that his only goal is political retribution at any cost. The president’s actions are a grave violation of our Constitutional order and have drawn sharp criticism from members of both parties.”
The indictment does not detail when James rented the home or how long his rentals lasted. This omission is troubling, particularly as it relates to when she decided to change course in the mortgage deal. Legal experts differ on how effective any possible defense would be, depending on whether she could show that she knew about the provision allowing for a secondary home. This awareness needs to be shown as of the date she executed the documents.
“In this case, prosecutors will be required to show that at the moment James signed the mortgage paperwork, she was aware of the provision regarding a secondary home, that she intended to use it for some different purpose, and that she intended to obtain a financial benefit as a result of her deceit.”
Compounding the intricacies, attorney Levitan pointed out this kind of case is uncharted territory. “I’m unaware of the federal government having previously charged anyone for fraud based on renting out a second home,” he remarked.
Moreover, Levitan noted that James’s loan had a very small amount of loss, which would have bolstered her arguments of selective prosecution. “It’s clear why the career prosecutors in the Eastern District of Virginia refused to bring a case: James doesn’t appear to have made any misrepresentation in her mortgage because the mortgage does not directly prohibit rentals.”
Selective prosecution might be an even more important part of James’s defense strategy. Legal scholar John Coffee, no fan of the broader varietal of claims, described the implications. “Normally, a claim that this is a vindictive prosecution does not work,” he stated. He acknowledged that “you don’t usually have the president calling for these sort of things.”
As this case develops, it is bound to attract more attention from both legal scholars and political observers. That result would establish significant precedents in mortgage fraud cases, as well as in cases where defendants allege that prosecution has been politically motivated.