Attorney General Pam Bondi was reportedly blindsided Thursday when Lindsey Halligan, President Donald Trump’s newly appointed U.S. Attorney for the Eastern District of Virginia, secured an indictment against New York Attorney General Letitia James without any prior coordination with Justice Department leadership in Washington, D.C., according to multiple sources familiar with the situation.
The indictment centers on a 2020 property purchase in Norfolk, Virginia, where prosecutors claim James misrepresented the home as a secondary residence to secure better mortgage terms. According to court filings, she later rented the property out, violating the terms of her mortgage and saving nearly $19,000 in interest over the life of the loan.
Two officials told CNN that Bondi and top Justice Department figures were “caught off guard” by Halligan’s decision to move forward independently. Halligan, who has led the Virginia office for just over two weeks, allegedly bypassed normal channels and took the case straight to a grand jury—resulting in James’s surprise indictment on two felony counts: bank fraud and making false statements to a financial institution.
If convicted, James faces up to 30 years in prison per count, fines up to $1 million per count, and possible forfeiture of the property. However, sentencing would ultimately depend on federal guidelines and the discretion of the presiding judge.
James has forcefully denied wrongdoing, calling the indictment “a politically motivated stunt” meant to punish her for her prior legal crusade against President Trump. “This is about revenge, plain and simple,” she said in a statement Friday.
Behind the scenes, Bondi’s Justice Department is said to be facing internal divisions over how the prosecution was handled. Several senior officials reportedly questioned Halligan’s unilateral decision to present the case without first obtaining clearance from Main Justice.
Halligan, a former private defense attorney known for her loyalty to Trump, has already made headlines for taking aggressive action. Her decision to indict James mirrors her earlier push to pursue former FBI Director James Comey.
Letitia James rose to national prominence by targeting Trump’s business empire, leading civil cases that sought hundreds of millions in damages. Many viewed her as a partisan figure who used her office to wage political vendettas—making Thursday’s indictment a moment of poetic justice for Trump allies.
Still, some within DOJ worry that Halligan’s tactics may undermine institutional norms and expose the department to claims of politicization.
James’s legal team plans to challenge the indictment as selective prosecution, arguing that similar mortgage discrepancies have rarely resulted in criminal charges. Legal experts agree that proving criminal intent in such cases can be difficult, especially when the alleged misstatement involves a property designation rather than a financial misappropriation.
James is scheduled to appear in federal court in Norfolk on October 24, where she will be formally arraigned. While the indictment alone does not remove her from office, a felony conviction could trigger automatic removal under New York state law.
Bondi, meanwhile, is expected to meet with senior DOJ officials to review how Halligan handled the prosecution.
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