The Justice Department has subpoenaed members of the Fed board as part of a criminal investigation into Lisa Cook, digging into allegations that she gave false information on mortgage applications, in efforts to get to chairman Jerome Powell.
The probe is being led by federal prosecutors who are using grand juries to collect evidence tied to Cook’s properties in Ann Arbor, Michigan, and Atlanta, Georgia, according to The Wall Street Journal.
The investigation started after Bill Pulte, who was picked by President Donald Trump to lead the Federal Housing Finance Agency, filed two criminal referrals accusing Lisa of mortgage fraud . Trump is using those claims to justify removing her from the Fed board.
He wants her seat so he can replace her with someone loyal. “We’ll have a majority very shortly,” he told reporters last month while discussing the board.
Lisa’s attorney, Abbe Lowell, didn’t give a statement. The Justice Department also refused to comment. But court filings reveal Lisa’s position: she believes Trump made up the charges just to clear her out and install a replacement.
She filed a lawsuit last month saying his move to fire her was illegal, arguing that he invented a fake reason to fill the seat and push his political agenda. She’s asking for an emergency order to stop him from removing her while the case moves forward.
Lisa Cook files lawsuit to block Trump from replacing her
The White House says firing Lisa is legal under the Federal Reserve Act, which allows the president to remove a Fed governor “for cause,” and Trump’s administration insists they’re acting within those powers.
But Lisa’s legal team countered last week that she never committed fraud and is being targeted to break the Fed’s independence, with the real goal being to oust Powell.
The next board meeting is scheduled for September 16, and if Lisa is gone by then, Trump’s people will hold the majority. But it doesn’t even matter, because Powell is cutting rates regardless.
At the center of the allegations is Lisa’s handling of three mortgage applications. The first two involved homes in Ann Arbor and Atlanta. Both were marked as her primary residence in loan documents filed in 2021.
That’s not automatically illegal; some lenders allow it under certain conditions, but Pulte claims she used that status to get lower interest rates that are only meant for buyers who live in the homes they purchase. The third property, a condo in Cambridge, Massachusetts, was listed as a second home, but Lisa was earning rental income from it during the same time.
Pulte says the Cambridge loan also broke rules because the terms required the property to be primarily used by the owner, not rented out. Still, the loan didn’t explicitly ban renting. Lisa hasn’t denied collecting income from it, but she maintains that she didn’t do anything wrong.
Ed Martin runs DOJ probe amid wider Trump push into Fed
The criminal investigation is being led by Ed Martin, a senior official at the Justice Department. Attorney General Pam Bondi put him in charge of probing mortgage fraud by public officials. Ed briefly served as interim U.S. attorney in Washington, D.C., in the early months of Trump’s return to office. But he never got Senate approval. Republicans blocked his confirmation after he supported people charged in the January 6 Capitol riot.
Lisa isn’t the only Trump rival facing this kind of legal pressure. The same mortgage-fraud claims are being used against New York Attorney General Letitia James and California Senator Adam Schiff, both loud critics of the president. The Lisa investigation looks like part of a wider pattern: federal action against people seen as political threats.
The odds of prison time for mortgage fraud in America are kinda super slim though. In the entirety of last year, only 38 people got sentenced for federal mortgage fraud out of literal thousands, and the average sentence was just 14 months, according to data from the Sentencing Commission.
Also, the Federal Reserve Bank of Philadelphia reported in 2023 that roughly one-third of single-family home investors lie about living in the homes they buy to get better deals. But proving fraud means proving intent, so yeah, Lisa’s defense hinges on the argument that even if there were mistakes on paper, she never meant to mislead anyone.
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