Federal prosecutors failed to obtain a new indictment Thursday against New York Attorney General Letitia James after a Virginia grand jury declined to return charges tied to a 2020 mortgage purchase.
The move follows a judge’s dismissal of an earlier prosecution that targeted James and former FBI Director James Comey because the U.S. attorney who presented the cases, Lindsey Halligan, was deemed unlawfully appointed. After that dismissal, prosecutors asked a grand jury to refile charges; jurors refused.
James initially faced accusations of bank fraud and making false statements to a lender over the purchase of a modest Norfolk home, after prosecutors said she signed a routine “second home” rider but then rented the property, obtaining loan terms reserved for primary residences. James has denied any wrongdoing and called the effort politically motivated.
Her legal team and supporters argue the case was part of an effort by the Justice Department, under pressure from President Donald Trump, to target critics. Her attorney warned that pursuing the matter despite the court ruling and the grand jury’s refusal would amount to an assault on the rule of law.
Prosecutors have signaled they may try to secure an indictment again. Even if charges are refiled, observers note additional legal hurdles: James’ lawyers have alleged vindictive prosecution and cited other government conduct they say was improper, arguments the judge had not ruled on before dismissing the earlier indictment.
The controversy centers on Halligan’s rapid elevation to lead the Eastern District of Virginia after the prior interim U.S. attorney, Erik Siebert, resigned following pressure to bring charges against Comey and James. President Trump publicly urged swift action and later announced he would nominate Halligan; Attorney General Pam Bondi oversaw Halligan’s swearing-in. Comey was indicted three days after that swearing-in and James two weeks later.
The Justice Department defended Halligan’s appointment and disclosed that Bondi had given Halligan the additional title of “Special Attorney” in an apparent effort to shore up the indictments. U.S. District Judge Cameron McGowan Currie ruled that the appointment mechanism was improper and that the retroactive designation could not cure the defect, leading to the dismissal that precipitated the grand jury’s review.
The episode adds to a string of setbacks for the Justice Department in high-profile cases since the start of the second Trump administration, including instances where grand juries have declined to return indictments. The dispute over the James case is likely to continue, with prosecutors reportedly considering additional filings and James’ team prepared to press defenses they say demonstrate political targeting.