New York Attorney General Letitia James was indicted Thursday on federal bank fraud charges after prosecutors alleged she lied on a mortgage application to secure favorable loan terms for a Virginia property she later rented out. A federal grand jury found that James misrepresented a Norfolk home as a second residence, when in fact, it was used as a rental property to generate income.

James and a co-purchaser acquired the single-family home in August 2020 for approximately $137,000, using a $109,600 mortgage to finance most of the purchase. The loan explicitly prohibited using the property as a rental or investment. Prosecutors say James falsely claimed it would be a second home, allowing her to qualify for a lower interest rate and ultimately save around $19,000 over the life of the loan.

Financial disclosure forms from 2020 to 2023 show James labeled the property as an “investment,” but she changed that classification to “real property” in 2024, shortly after the Federal Housing Finance Agency referred the case for criminal investigation. Prosecutors further allege that James made false statements on homeowners’ insurance applications and federal tax filings, identifying the home as a rental and reporting thousands of dollars in rental income.

The federal indictment includes two charges: bank fraud and making false statements to a financial institution. If convicted on both counts, James faces up to 60 years in prison and $2 million in fines. Her first court appearance is scheduled for October 24.

Though she has access to a $10 million state legal defense fund, James has opted to rely on the Democratic Attorneys General Association to cover legal costs. This decision has sparked criticism over transparency, as the group’s finances are not subject to full public disclosure.