Another grand jury refuses to indict Letitia James

A federal grand jury on Thursday refused to indict former New York Attorney General Letitia James for a second time in about a week, according to two sources familiar with grand jury proceedings — as prosecutors struggle to revive a bank fraud case against the Trump foe.

Federal prosecutors presented James' case to grand jurors in Alexandria, Virginia, after a separate grand jury in Norfolk, Virginia, turned down the case last week. 

The Justice Department is considering trying to indict James again next week, this time in Richmond, Virginia, a source familiar with the investigation told CBS News.

The repeated setbacks are extremely unusual, as grand juries almost never decline to indict people. In the 2016 fiscal year, federal prosecutors reported not bringing charges because they failed to get an indictment just six times, out of more than 150,000 arrests, according to Justice Department figures.

The Justice Department is fighting to re-indict James after a federal judge tossed out a bank fraud case against her last month, on the grounds that the lead prosecutor in the Eastern District of Virginia, interim U.S. Attorney Lindsey Halligan, was serving in her job unlawfully.

That ruling also threw out an indictment against former FBI Director James Comey on the same grounds. It's unclear whether the Justice Department will try to revive the charges against Comey, who was accused of lying to Congress in 2020. The statute of limitations for Comey's charges has lapsed, but the government may argue it is entitled to an extension.

James was initially charged in October with allegedly making a false statement on mortgage paperwork for a house she bought in 2020. Prosecutors accused her of falsely claiming the property would serve as her second home, but instead using it as a rental and investment property, allowing her to save thousands of dollars by getting a lower interest rate. 

James has denied the allegations and argued the case against her is politically motivated. 

President Trump's enmity for James stretches back to 2022, when James sued the then-former president and his company in civil court for allegedly misstating the value of his real estate to get better lending and insurance terms. A judge found Mr. Trump and the Trump Organization liable, ordering them to pay hundreds of millions of dollars. Earlier this year, an appellate court tossed out the financial judgement but was divided on the merits of the case.

James's attorneys have argued the case against her should be tossed out due to vindictive prosecution and "outrageous government conduct." They've pointed to a Truth Social post in which the president urged Attorney General Pam Bondi to look into her, and alleged "unethical behavior" by several officials at the Justice Department and the Fair Housing Finance Authority.

Halligan's office sought charges against Comey and James following upheaval in the U.S. Attorney's Office for the Eastern District of Virginia.  

Her predecessor as the office's top prosecutor, Erik Siebert, resigned in late September amid fears among staff that he would be forced out for refusing to charge James, CBS News has previously reported. Days later, Halligan — a former White House staffer and personal attorney to Mr. Trump — was sworn in as interim U.S. attorney. Comey was indicted less than a week after that, and James was indicted a few weeks later. 

Both Comey and James argued that Halligan was not legally appointed to her role, and asked for their charges to be tossed out. U.S. District Judge Cameron Currie dismissed their indictments without prejudice, meaning the government could attempt to indict them again.

In a statement, James's attorney Abbe Lowell called the saga "a stain on this Department's reputation," and said any "further attempt to revive these discredited charges would be a mockery of our system of justice."

"For the second time in seven days, the Department of Justice has failed in its clear attempt to fulfill President Trump's political vendetta against Attorney General James," Lowell wrote Thursday. "This unprecedented rejection makes even clearer that this case should never have seen the light of day."

The Justice Department did not immediately respond to a request for comment.