Letitia James Resigns Amid Mortgage Fraud Indictment Turmoil — Speculation Swirls: Is Adam Schiff Next?
By Elena Vasquez, Political Correspondent New York, NY – November 3, 2025
New York Attorney General Letitia James, the Democratic firebrand whose civil fraud case against President Donald Trump resulted in a landmark $454 million judgment last year, has resigned in disgrace following a federal indictment on charges of mortgage fraud. The stunning development, announced late Friday in a terse statement from her office, caps a whirlwind of legal and political drama that has left the Empire State reeling and the national Democratic Party bracing for aftershocks. As James steps down effective immediately—pending confirmation from Gov. Kathy Hochul—whispers in Washington corridors point to California Sen. Adam Schiff as the next potential target in what critics decry as a Trump administration-orchestrated purge of his adversaries.
James, 66, faced two felony counts: one of bank fraud and one of making false statements to a financial institution, stemming from her 2020 purchase of a three-bedroom home in Norfolk, Virginia. The five-page indictment, unsealed October 9 in the U.S. District Court for the Eastern District of Virginia, alleges James misrepresented the property as a secondary residence to secure a lower interest rate and seller credits, saving her approximately $18,933 over the loan’s life—only to rent it out as an investment property, violating the mortgage’s “Second Home Rider.” Prosecutors, led by interim U.S. Attorney Lindsey Halligan—a Trump appointee—claim James netted thousands in rental income, though specifics on the duration or amounts remain sparse.
The case’s origins trace to a May referral from Federal Housing Finance Agency Director William J. Pulte, a Trump loyalist, who flagged discrepancies in James’s loan documents amid a broader audit of high-profile figures. Career prosecutors in Halligan’s office initially balked, with one memo citing “conflicting evidence” and no probable cause—evidence showed James allowed relatives to live rent-free during the COVID-19 pandemic, potentially qualifying as an “extenuating circumstance” exemption. Halligan, undeterred, presented the case to a grand jury anyway, securing the indictment just three days after MSNBC reported internal resistance. James pleaded not guilty October 24 before U.S. District Judge Jamar Walker, a Biden appointee, vowing to fight: “This is a politically motivated witch hunt by a vengeful administration.”
Her resignation, effective November 7, follows mounting pressure from within the party and state bar associations. Hochul, facing her own reelection in 2026, accepted it “with regret but understanding,” appointing Deputy AG Tish James’s longtime aide, Angela Levy, as interim AG. James’s office cited “personal and professional considerations,” but insiders whisper of ethics probes and donor flight: Contributions to her potential gubernatorial bid plummeted 45% post-indictment, per OpenSecrets data. “Letitia built her career on accountability,” said a former aide, speaking anonymously. “Irony stings.”
The scandal’s seismic impact on Democrats cannot be overstated. James’s 2022 civil win against Trump—fining the Trump Organization $355 million plus interest—cemented her as a resistance icon. Now, it boomerangs: Trump, in a Mar-a-Lago rally October 15, crowed, “She defrauded banks while defrauding me—karma’s a beach!” GOP leaders, including House Speaker Mike Johnson, hailed it as “equal justice under law,” while Senate Minority Leader Chuck Schumer called it “retaliatory rot.” Polls show Democratic favorability dipping 8 points nationally, with a Siena College survey finding 52% of New Yorkers viewing the case as “politically driven” but 61% believing James should step aside.
Enter the whispers: Is Adam Schiff next? The California senator, Trump’s perennial nemesis—leading the 2019 impeachment over Ukraine aid and the House Intelligence Committee’s Russia probe—faces a parallel DOJ investigation into alleged mortgage fraud on his Maryland property. Initiated August 2025 by Attorney General Pam Bondi at Trump’s behest, the probe—overseen by controversial advisor Ed Martin—alleges Schiff misrepresented a refinance as a primary residence from 2009 to 2020, securing undue tax breaks and rates. Pulte’s FHFA referral mirrors James’s, citing a “sustained pattern” of fraud.
Yet, momentum stalls. Maryland U.S. Attorney Kelly Hayes briefed Deputy AG Todd Blanche October 23, concluding “insufficient evidence” for charges, per MSNBC sources. Career prosecutors echo Virginia’s hesitance, questioning intent amid fuzzy federal guidelines. Schiff, 65, formed a legal defense fund August 19, retaining ex-U.S. Attorney Preet Bharara, who blasted it as “weaponization writ large.” Trump, undeterred, fumed October 23: “Shifty Schiff’s a scam artist—Fannie Mae says so!” Schiff dismissed it on CNN: “Baseless smears from a bully in the Oval.”
Layered scandals compound the threat. Declassified FBI notes from August—released by Director Kash Patel—revive 2017 whistleblower claims that Schiff greenlit classified leaks to undermine Trump during Russiagate. Investigated in Trump’s first term and dismissed for credibility issues, the allegations now fuel a House Judiciary subpoena. Schiff counters: “Recycled fiction to distract from real crimes—like Epstein ties.”
America braces for the deluge. Ethics watchdogs like CREW decry a “retribution renaissance,” with 17 Trump foes probed since January. Democrats rally: AOC tweeted, “Weaponized DOJ = Watergate 2.0.” Republicans retort: “Rule of law, finally.” As James’s trial looms December 15—potentially netting 30 years—Schiff eyes 2026 reelection warily. Hochul’s interim pick signals continuity, but the party’s soul-searching intensifies: In a post-Trump era of accountability, who falls next? New York’s turmoil is a harbinger—secrets unraveling, giants toppling, controversy cresting. The wave breaks soon.
