Trump got his fraud case against Letitia James. Winning it is a different question

In a five-page indictment, secured from a federal grand jury in Virginia, federal prosecutors focused on a $109,600 loan that James took out in 2020 for a home in Norfolk, Va. The charges, signed by Lindsey Halligan, President Trump’s newly appointed U.S. attorney in eastern Virginia, allege that James knowingly misrepresented her intentions for the home by saying in loan documents that she would use it as a second residence but instead rented the property.

With that claim, prosecutors said, James secured more-favorable borrowing terms and stood to net nearly $19,000 in savings for the life of the loan. She faces one count alleging that she violated a federal bank fraud statute, and another alleging that she made false statements to a financial institution. James, who previously brought a civil fraud case against Trump, called the charges baseless and desperate.

Legal observers said the dollar figure fell well short of the typical federal prosecution alleging bank fraud, leaving an impression that the case wasn’t about the money.

“The amount of loss in this case is small peanuts, period," said Gene Rossi, a former federal prosecutor in eastern Virginia.

President Trump at the White House on Thursday.

The Justice Department could face challenges in establishing that James had an intent to commit fraud, said Jacqueline Kelly, a former federal prosecutor in Manhattan.

“The idea that someone would expose themselves to federal fraud charges for so little money doesn’t really make any sense," she said. “It’s a red flag."

Mortgage-fraud prosecutions typically feature allegations of a more complex fraud scheme and losses suffered by a financial institution or other victims, legal experts said.

“If DOJ brought cases like this regularly, many Americans who own vacation properties could be targets of federal criminal investigations," said Rizwan Qureshi, a former federal prosecutor.

Halligan said that the Justice Department brought the case for legitimate reasons and that the facts were clear. The charges against James “represent intentional, criminal acts and tremendous breaches of the public’s trust," she said.

The prosecution upended the U.S. attorney’s office that brought it. People familiar with the internal deliberations said career prosecutors and the previous, Trump-nominated leader of the Virginia office, Erik Siebert, thought there wasn’t enough evidence to bring a case against James, or against former Federal Bureau of Investigation Director James Comey. He was charged late last month with lying to Congress and on Wednesday pleaded not guilty. The president pushed Siebert out and installed Halligan, who presented both indictments.

The administration is pursuing potential mortgage fraud cases against Democratic Sen. Adam Schiff and Federal Reserve governor Lisa Cook, who both deny any wrongdoing. Trump cited fraud allegations in his attempt to force Cook from office. Two lower courts have blocked her firing, and the Supreme Court declined to grant the administration’s emergency request to remove her now, instead scheduling arguments for January.

James’s legal team has already signaled that it will seek to have the case dismissed on the grounds that the Justice Department initiated the prosecution for impermissible political reasons. Comey has done the same thing.

Glenn Kirschner, a former federal prosecutor in Washington, D.C., said public statements by Trump and other administration officials could help the defense. “I would be shocked if this thing makes it to a jury trial," he said. “I fully expect the judge to grant a motion to dismiss based on vindictive prosecutions."

James had faced scrutiny since April after Bill Pulte, the head of the Federal Housing Finance Agency, sent a criminal referral to the Justice Department related to properties she bought in Norfolk in 2023 and in New York. Pulte’s referral alleged that she misrepresented that the Norfolk property was her principal residence to secure more-favorable terms.

Thursday’s indictment focused on a different Norfolk house.

James’s lawyer, Abbe Lowell, has defended the bank documents related to the 2023 purchase in detail, saying James corrected an error on the form and told her bank she wouldn’t be living there. Lowell hasn’t addressed the 2020 purchase, which wasn’t included in Pulte’s criminal referral.

“We will fight these charges in every process allowed in the law," Lowell said.

Write to C. Ryan Barber at ryan.barber@wsj.com and Lydia Wheeler at lydia.wheeler@wsj.com