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Fannie Mae officials found no clear evidence of fraud

against

James

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James faces charges of bank fraud, denies allegations

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Pulte accused of abusing position to target James

By Sarah N. Lynch and Andrew Goudsward

WASHINGTON, Nov 17 (Reuters) - Senior fraud

investigators at Fannie Mae believed there was no clear evidence

to prove that New York Attorney General Letitia James committed

mortgage fraud, according to new information disclosed by James'

legal team in a filing on Monday.

The filing, which asks a federal judge to dismiss the

criminal charges against James on the basis of outrageous

government conduct, reveals some new details about how people

inside Fannie Mae viewed the investigation into James and the

role that Trump ally Bill Pulte, the nation's top housing

regulator, played in shaping the probe.

In June communications between Fannie Mae's Director of

Mortgage Fraud Sean Soward and Jennifer Horne, the vice

president of financial crimes at Fannie, Soward expressed

concern that the case was "certainly not clear and convincing

evidence" of fraud, according to the filing.

James, an elected Democrat, faces charges of bank fraud and

making a false statement to a financial institution for

allegedly using a Virginia home as an investment property in

violation of loan terms that required her to make it a secondary

residence. She has pleaded not guilty.

She is one of several of President Donald Trump's political

foes facing criminal charges after he called on the Justice

Department to act against them.

The case was opened after Pulte, who leads the Federal Housing

Finance Agency, sent the department a criminal referral, and

Attorney General Pam Bondi assigned pardon attorney and

weaponization czar Ed Martin to help with the probe as a special

assistant U.S. Attorney handling mortgage fraud cases involving

public officials.

Trump later installed his former personal lawyer Lindsey

Halligan to serve as U.S. Attorney for the Eastern District of

Virginia to bring the indictment, after her predecessor refused

to do so, citing a lack of evidence.

QUESTIONS OVER PULTE'S ROLE

In Monday's filing, James' attorneys raised questions about how

Pulte gained access to their client's non-public mortgage files.

They noted that Pulte also sent Halligan a private letter on

October 6, providing a summary of the information and financial

calculations on the property at the heart of the indictment, as

well as information from Fannie Mae's financial crimes

investigative team.

Not long afterward, Halligan went before a grand jury in

Alexandria to present evidence, even though it was a different

grand jury from the one in Norfolk, Va. that had been convened

in the case earlier. When a two-count indictment was returned,

it bore the "exact calculations Director Pulte had sent to Ms.

Halligan just a few days prior," her lawyers said.

"Director Pulte abused his position as FHFA Director to

direct an investigation of AG James, outside of the normal

processes and rules governing the agency, despite being told

repeatedly that there was no evidence of wrongdoing," the filing

said.

Reuters previously reported that the White House earlier this

month ousted the FHFA Acting Inspector General Joe Allen not

long after he tried to provide prosecutors in the James case

with crucial, constitutionally required discovery.

Citing that and other media reports in its filing, James'

attorneys said those disclosures had to date not been produced

to the defense team.

The filing also raises concerns with Martin's conduct,

citing his decision to pose for photos outside of her Brooklyn

home and a letter he sent her calling on her to resign as New

York's attorney general.

"The letter, by itself, violated Justice Department rules,

the Principles of Federal Prosecution, and various codes of

professional responsibility and ethics," they wrote.