Gift-Wrapped for DOJ (Part 3): The Brooklyn Mortgage Scheme That Mirrors the Virginia Fraud

Federal prosecutors now have a gift-wrapped case spanning two states, two decades, and multiple federal crimes—delivered by Letitia James’ own attorney, Abbe Lowell, and documented in public records.

Letitia James’ mortgage fraud didn’t begin in Virginia. It began in Brooklyn—on paper, in ink, and under oath.

Before she falsely declared a Norfolk home her “principal residence” to qualify for a high-LTV federally backed mortgage, James spent over 20 years systematically misclassifying her New York property at 296 Lafayette Avenue. She told lenders it had four units. Or three. Or two. Or sometimes just one. But never five—the truth that would have disqualified her from nearly every favorable mortgage program she accessed.

What emerged in Virginia was not a departure from her established pattern. It was a sequel—using the same playbook she had perfected over two decades in Brooklyn.

The Certificate That Changed Everything

On January 26, 2001—just two weeks before James closed on her purchase—the New York City Department of Buildings issued a Certificate of Occupancy for 296 Lafayette Avenue that reads, in bold capital letters:

FIVE (5) FAMILY DWELLING

Utility records from Con Edison confirm the five-unit reality—six separate service designations, including five residential meters and one common area, matching the legal classification James has consistently concealed. This was further verified when Gateway Pundit’s Joel Gilbert and I visited the property and confirmed one doorbell for each of the five apartments.

This wasn’t an obscure bureaucratic detail. Under federal mortgage regulations, this classification created a regulatory firewall that disqualified the property from accessing:

• Conforming 1–4 family residential mortgage products (with rates typically 0.50-0.75% lower than commercial)
• Federal programs like HAMP, DU Refi Plus, and HomeReady (reserved for smaller residential properties)
• High loan-to-value lending without commercial underwriting requirements
• Reduced reserve requirements and streamlined eligibility criteria
• Standard residential mortgage insurance instead of commercial coverage

James knew this classification when she bought the property. The Certificate of Occupancy was issued before her closing. Yet for the next 20 years, she would systematically violate 18 U.S.C. § 1014 on mortgage document after mortgage document.

Under New York City law, the Certificate of Occupancy is the definitive legal document that establishes the lawful number of dwelling units in a building. It overrides all other representations, including personal use or rental behavior. Any mortgage statement that contradicts the C/O is, by law, a false representation of a material fact.

Two Decades of Federal Crimes

Under 18 U.S.C. § 1014, it is a federal crime to “knowingly make any false statement…for the purpose of influencing in any way the action” of a federally insured or affiliated financial institution. The statute requires four elements:

1. ✓ A false statement
2. ✓ Made to a federally-affiliated financial institution
3. ✓ Intended to influence the institution
4. ✓ Made knowingly and willfully

Between 2001 and 2021, James signed or authorized at least ten separate mortgage-related documents for 296 Lafayette Avenue, each containing false statements about the property’s unit count that meet all four statutory requirements:

The Timeline of Federal Violations :

• 2021-06-21 (Citizens Bank): “1 or 2 Family Residence”
• 2019-08-23 (Citibank): “4 Family”
• 2017-10-26 (Wells Fargo): “4 Family”
• 2015-01-26 (Municipal Credit Union): “4 Family”
• 2011-08-23 (US Bank/HAMP): “4 Fam.” (handwritten modification)
• 2007-05-25 (American General): “1–2 Family Residence”
• 2006-10-26 (American General): “1–3 Family”
• 2005-07-01 (MERS): “4 Family”
• 2003-08-29 (MERS): “4 Family Dwelling”
• 2001-02-14 (Chase): “One or Two Family” (with 1-4 Family Rider)

Each false statement was material under federal law—capable of influencing the lender’s decision and enabling James to access financing terms she wasn’t legally entitled to receive.

The HAMP Smoking Gun: Handwritten Evidence of Criminal Intent

The most damning evidence appears in James’ 2011 federal HAMP (Home Affordable Modification Program) application. HAMP was created during the financial crisis to help struggling homeowners—but explicitly excluded properties with more than four residential units.

James’ five-unit building didn’t qualify. So someone made handwritten modifications to the mortgage document—which our investigation first discovered and reported—scrawling “4 fam” in the corner while simultaneously adding contradictory language about “not more than 6 residential units,” creating deliberate ambiguity that maintained technical eligibility while acknowledging the property’s true nature.

Statute of Limitations: Recent Crimes Remain Prosecutable

While some of the earliest Brooklyn transactions may be beyond the federal five-year statute of limitations for criminal prosecution under 18 U.S.C. § 3282, multiple recent transactions remain within the criminal statute of limitations:

Federal prosecutors may also invoke the doctrine of continuing offenses, or pursue conspiracy or wire fraud counts with separate limitation clocks. Prior false filings may further toll limitations under the financial institution fraud exception in 18 U.S.C. § 3293(2).

Earlier transactions remain legally significant as:

• Pattern evidence showing intent and modus operandi under FRE 404(b)
• Foundation for civil recovery actions (longer limitation periods)
• Context transforming the Virginia case from isolated misconduct to systematic criminal behavior

The Defense That Became a Confession

James’ defense team may have done prosecutors a favor. In an April 2025 letter to federal investigators, attorney Abbe Lowell inadvertently confirmed 24 years of unit count misrepresentation—transforming a rebuttal into a written confession.

The defense admits James operated the Brooklyn property “as a four-person residence for the past 24 years” despite knowing the Certificate of Occupancy legally classified it as having five units. This isn’t a defense—it’s an admission of 24 years of systematic mortgage fraud across multiple federal lenders.

Even more damaging, Lowell cites James’ 2011 HAMP application as proof the property was “four units,” apparently unaware this strengthens the criminal case. HAMP explicitly excluded five-unit buildings, meaning James’ application was federal program fraud—using the same misrepresentation strategy she had perfected over two decades.

Federal prosecutors rarely receive such clear evidence of criminal intent. The defense essentially argues: “Yes, she lied to lenders for 24 years, but she had good reasons.” Under federal mortgage fraud statutes, the reasons don’t matter—the systematic misrepresentation does.

Federal Prosecutorial Framework: Pattern Evidence and Intent

As established in United States v. Wells, 519 U.S. 482 (1997), federal mortgage fraud doesn’t require prosecutors to prove actual harm. The Supreme Court ruled: “A scheme to defraud requires only that the defendant intend to deceive or cheat the victim; it is irrelevant whether the victim is actually harmed.”

James’ Brooklyn mortgage history provides exactly the type of pattern evidence federal prosecutors seek:

• 10+ false statements across 20 years
• 6 different federally-affiliated lenders (ensuring no single institution could detect the pattern)
• Consistent understatement of unit count (never the truth, always beneficial to James)
• Filed long after the Certificate of Occupancy established the true classification
• Handwritten modifications suggesting active document manipulation
• Federal program targeting (HAMP specifically excluded 5+ unit buildings)

Under Federal Rule of Evidence 404(b), this pattern evidence would be admissible to prove “motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.”

Quantified Financial Benefit: $155,000-$240,000 in Criminal Gains

The financial benefits James obtained through her Brooklyn mortgage fraud were substantial and quantifiable, based on industry mortgage rate data and GSE lending guidelines:

Note: Because the exact interest rate and fee structure of her closed loans are not publicly available, we estimated the financial benefit using prevailing market data from the respective time periods, published Fannie Mae Loan-Level Price Adjustment (LLPA) matrices, and GSE lending program guidelines. All calculations reflect conservative assumptions that favor the defense.

GSE Participation and Federal Jurisdiction

Several of James’ Brooklyn mortgages were originated by Government Sponsored Enterprise (GSE) aligned lenders—the same basis the Federal Housing Finance Agency (FHFA) used to refer her Virginia case to the Department of Justice:

• Citizens Bank (Fannie Mae seller/servicer)
• Citibank (Major GSE participant)
• Wells Fargo (Top GSE lender)
• US Bank (HAMP servicer)
• MERS (GSE electronic registry system)

When borrowers defraud GSE-backed mortgages, it falls under FHFA’s regulatory authority and triggers federal criminal jurisdiction under 18 U.S.C. § 1014. James’ Brooklyn scheme involves the same federal exposure as her Virginia fraud—potentially explaining why her Virginia case moved so quickly to DOJ referral.

Sentencing Guidelines Analysis

Under USSG §2B1.1, James’ Brooklyn mortgage fraud would face significant enhancement factors:

• Loss amount $155K-240K+ (4-6 level enhancement)
• Abuse of position of trust (2-level enhancement)
• Pattern of activity (2-level enhancement)
• Sophisticated means (2-level enhancement)

Estimated guideline range: 30-37 months imprisonment

Federal precedent shows courts regularly impose prison sentences for similar conduct:

• U.S. v. Phillips (C.D. Cal. 2023): 18 months for $67,000 benefit
• U.S. v. Chen (E.D.N.Y. 2022): 21 months for $82,000 benefit
• U.S. v. Martinez (S.D. Fla. 2021): $75,000 fine + probation for $95,000 benefit

James’ benefits exceed all these cases, and her status as a public official would likely warrant enhanced penalties under USSG §3B1.3.

Side-by-Side: The Identical Criminal Playbook

The parallels are unmistakable. James used the same criminal strategy in both states: identify the regulatory barrier to favorable financing, then systematically make false statements to federally affiliated lenders to circumvent it. The only difference is scale—Brooklyn represents 20 years of systematic federal crimes, while Virginia was a single transaction that finally triggered federal attention.

Prosecutorial Advantages: Ready for Immediate Indictment

Brooklyn provides federal prosecutors with something invaluable in white-collar cases: clear criminal intent across multiple transactions. When James falsely declared the Virginia property her “principal residence,” she wasn’t making an isolated mistake. She was deploying a criminal strategy she had refined over two decades.

Conclusion: Template for a Criminal Conspiracy

Brooklyn was the criminal template. Virginia was the sequel that triggered federal attention. Together, they reveal a two-decade pattern of systematic fraud disguised as routine mortgage transactions.

James didn’t stumble into mortgage fraud in Virginia—she brought decades of criminal expertise perfecting it in Brooklyn. The handwritten HAMP modifications our investigation uncovered, the systematic unit count misclassifications, the targeting of federal programs—all of it was rehearsed and refined through years of successful federal crimes.

For federal prosecutors, this isn’t just evidence of additional violations. It’s proof that James’ Virginia fraud was part of a calculated, long-term criminal conspiracy to defraud federally regulated financial institutions and federal housing programs.

Two states. Two decades. Multiple federal crimes. One gift-wrapped case—delivered with a conviction guarantee.

Under the prosecutorial framework James herself has applied to others: these aren’t isolated errors—they’re evidence of systematic criminal intent spanning multiple federal jurisdictions and programs. As James famously stated when securing her $355 million judgment against Donald Trump, “No one is above the law.” If federal prosecutors fail to act now, they’ll be ignoring a mountain of documentary evidence that James herself would have used to indict someone else.

Written by,

Sam Antar

© 2025 Sam Antar. All rights reserved.

This investigative report is part of our ongoing series: The Letitia James Mortgage Investigation