Just days after demanding her resignation, Trump on Monday claimed to have fired Federal Reserve board member Lisa Cook, targeting the first Black woman to serve on the central bank’s board of governors.
His stated reason for the ouster? Unsubstantiated allegations of mortgage fraud.
In a letter to Cook posted on Truth Social, Trump said there was “sufficient reason to believe you may have made false statements on one or more mortgage agreements” based on allegations leveled by Bill Pulte, the chair of the Federal Housing Finance Authority last week. He had accused Cook of having claimed two different homes in two different states as a primary residence and characterizing the conduct as mortgage fraud.
“In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity. At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” Trump said.
Trump’s escalation against Cook is just the latest and most serious example of what has become a pattern since Pulte was confirmed to his role atop the FHFA earlier this year.
Pulte, a neophyte regulator who inherited a multimillion-dollar fortune from his housing developer grandfather and became known for giving out cash to people who engaged with him on Twitter as he built a massive following while donating to Republican candidates, has made a habit of taking to social media to accuse prominent politicians of mortgage fraud.
In every case, the target has been a Democrat who has somehow incurred Trump’s ire.
First, Pulte went after Letitia James, the New York State Attorney General who won a multimillion-dollar civil fraud judgment against Trump that has since been put on hold by a state appellate court.
He accused James of falsifying documents and property records relating to homes she owns in New York, New Jersey and Virginia to obtain lower mortgage rates — ironically the exact thing she obtained a jury verdict against Trump for doing with multiple properties over the years. The Department of Justice has confirmed an open investigation based on the allegations.
Pulte also accused Senator Adam Schiff of California of committing “mortgage occupancy fraud” months, sending another referral to the DOJ claiming that Schiff defrauded lenders by claiming his Potomac, Maryland home as a primary residence even though his legal address is at a Los Angeles-area condominium located in the House district he represented for nearly a quarter-century before his election to the upper chamber last year.
The tactic, which almost always begins with Pulte making accusations on his social media account that are signal-boosted by Trump and right-wing influencers, is reminiscent of the strategy Trump tried to deploy against Joe Biden in the summer of 2019 as both men ramped up their 2020 presidential campaigns.
In a now-infamous July 2019 phone call, Trump attempted to pressure Ukraine’s then-newly-elected president, Volodymyr Zelensky, into making baseless accusations of corruption against Biden and his son, attorney and lobbyist Hunter Biden, based on the latter’s work on the board of a Ukrainian energy firm called Burisma.
Trump wanted Zelensky to announce an investigation into the Bidens as a condition for Ukraine’s armed forces receiving more Javelin anti-tank missiles and for the Ukrainian leader to receive a coveted invitation to the White House.
There wasn’t any proof that either Biden had done anything illegal, but for Trump it didn’t matter. The accusation was enough.
That appears to be what he is doing now — with Pulte’s help.
Trump claimed the 1913 Federal Reserve Act gives him the power to remove Cook “for cause” and said the accusations Pulte had made against her gave him that cause.
Cook has neither been charged with any wrongdoing nor convicted of a crime, and in a statement, she said she would not resign and did not recognize Trump’s authority to oust her. Her attorney, Abbe Lowell, said he would “will take whatever actions” are needed to prevent the president’s “attempted illegal action.”
But according to mortgage and legal experts, neither man may have a leg to stand on when it comes to proving the allegations.
The Independent contacted a veteran Washington, D.C. mortgage broker affiliated with a major lender who previously worked as a criminal investigator in one of the nation’s largest cities to ask about the strength of Pulte and Trump’s accusations against Cook, James and Schiff.
The broker, who asked not to be identified because he was not authorized to speak publicly by the lender with whom he is affiliated, said Pulte’s reliance on mortgage documents absent any other information means he hasn’t made any effort to determine what the borrowers intended when they filled out the forms at issue.
For example, he said Schiff wouldn’t necessarily have erred when he listed both his California and Maryland homes as primary residences because he intends to live at both locations. He also stressed that it’s possible — although not common — for a person to have more than one primary residence because the law does not specifically state that only one property can receive treatment as a primary residence when determining interest rates.
“I wouldn’t call that mortgage fraud, because I can see the argument for two primaries. And … I don’t know who would prosecute that,” he said.
Even if Schiff were not a member of Congress and were only a person who travels to Washington for business enough to justify owning a property in the area, he said Schiff would be able to claim a second home as a primary residence because it was not being used as a rental property.
“I don’t see the fraud in this scenario,” he said.
He also cast doubt on Pulte and Trump’s allegations against Cook, which Pulte based on one of the Fed board member’s properties spending two weeks listed on Zillow for rent just a few months before she refinanced it as a primary residence.
Whether there has been fraud committed, he said, is “all about your intent at origination,” the point at which a loan is made.
“If you’re doing a primary residence, whether it’s refinance or purchase and at origin …your intent, your plan is you’re going to live there, right? And then, what if something happens, medical, someone loses a job, a couple months later, someone gets a job and has to relocate? That would be a plausible reason — I wouldn’t see that as fraud,” he said.
Nick Akerman, a former federal prosecutor in the Southern District of New York who handled numerous mortgage fraud cases during his time in government service, confirmed the importance of intent when prosecuting such cases in a phone interview with The Independent.
He criticized Pulte and Trump for not examining the full circumstances of each case they’ve touted and using out-of-context documents to make sweeping accusations.
“They’re taking one little snippet from something that could have been true one day, and then 30 days later, even 90 days later, could have changed in some way. The only way you can really make a mortgage fraud case is to show a persistent pattern of lies that you’d have to show something so blatant and show it happened on more than one occasion,” he said.
“If that’s all you’ve got, you don’t have much of a case, because you’ve got to be able to prove fraudulent intent. And if you can’t prove fraudulent intent, you’re nowhere with these things.”
Akerman compared the allegations against Cook, James and Schiff to the fraud case brought against former Trump campaign chairman Paul Manafort in New York State court.
Although a judge later dismissed the case against him based on a quirk in state law that made a pardon from Trump apply to the state charges, the New York City District Attorney had accused Manafort of conspiring with others to include multiple false statements and assertions in mortgage applications.
The former prosecutor also pointed out that James’ case against Trump had included far more detailed evidence of intent, based on what he described as “lies that were persistent over a long period of time.”
“But when you legitimately have two primary residents, and you can argue that. I mean, forget it. That’s about as weak a criminal case as you could ever bring,” he said.
