A federal grand jury in Virginia declined Thursday to indict New York Attorney General Letitia James on revived mortgage-fraud allegations, dealing a second blow to the Justice Department’s effort to prosecute one of President Donald Trump’s most prominent political adversaries.
Prosecutors returned to the grand jury after U.S. District Judge Cameron McGowan Currie dismissed the original indictment last month, ruling that the acting U.S. attorney who signed the charges, Lindsey Halligan, had been unlawfully appointed. Halligan, a former White House aide and Trump campaign lawyer, took office in September after the administration pressed veteran interim U.S. attorney Erik Siebert to resign.
The panel’s refusal to endorse new charges means the case is effectively on hold, although people familiar with the investigation say the department could present it to a different grand jury.
James, who has denied wrongdoing, welcomed the development. “It is time for this unchecked weaponization of our justice system to stop,” she said. Her lawyer, Abbe Lowell, called the outcome “a decisive rejection” and urged the department to abandon the prosecution.
The indictment had accused James of obtaining preferential loan terms by signing a “second-home rider” for a 2020 Norfolk property and later renting it out, a transaction prosecutors said amounted to bank fraud and making false statements to a financial institution.
Defense lawyers argued the charge was vindictive, pointing to a string of social-media posts in which Trump demanded action against James, who oversaw civil litigation that produced a multimillion-dollar judgment against him.
Judge Currie dismissed the earlier indictment “without prejudice,” leaving the door open for a re-filing, but she also signalled she would scrutinise any future appointment mechanism. The 120-day statutory limit for interim U.S. attorneys expired in May, she noted, so Halligan’s September installation violated federal law and “could not be resurrected” by a retroactive “Special Attorney” title.
The grand jury’s refusal marks at least the fourth time since January that federal panels have declined or delayed indictments in politically charged cases encouraged by the White House. Department spokespersons declined to comment on the grand-jury proceedings.