Letitia James Faces Federal Probe—Taxpayers Might Foot the Bill for Her Defense

New York Attorney General Letitia James may be eligible to use taxpayer dollars to cover legal expenses stemming from a federal investigation into alleged fraudulent real estate activity, according to language contained in the state’s newly unveiled operations budget bill.

The bill includes a provision establishing a $10 million fund intended to pay for “reasonable attorneys’ fees and expenses” for certain state officials involved in federal legal actions initiated after January 1, 2025.

The language, while not naming James directly, is reportedly broad enough to encompass her case and those of other New York state employees currently under scrutiny by the Trump administration.

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Multiple sources familiar with the bill confirmed to The Post that the language was inserted with James’ situation in mind.

James is currently facing a criminal referral to the Department of Justice over allegations of mortgage fraud.

The referral was made in April by Federal Housing Finance Agency Director William Pulte, who accused James of falsifying bank documents and property records in relation to a home purchase in Virginia.

The provision in the budget outlines that funds may be used by any state employee who has retained private legal counsel “in response to any request, summons, command, subpoena, warrant, investigative interview or document request, audit or legally compulsive process” initiated by the U.S. government after January 1, 2025, if it is related to their duties in New York state government.

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The move could allow James to rely on both this new state fund and a private legal defense fund to mount her legal response.

James became a prominent political figure in recent years for her civil prosecution of President Donald Trump.

In that case, she declared publicly that “no one is above the law,” a statement that has since resurfaced as federal investigators review her own conduct.

In light of the referral, James’ critics have pointed to a potential double standard.

Letitia James is facing 30 years in prison and $1M in fines for falsiying a loan application..

Byron Donalds ~of course she should be charged

The liberal media is trying to bury this story, so you folks know exactly what to do pic.twitter.com/QsgNT3F8Xw

— @Chicago1Ray 🇺🇸 (@Chicago1Ray) April 24, 2025

A spokesperson for the New York Attorney General’s office addressed the matter in a statement to the press on Wednesday, calling the investigation politically motivated.

“Donald Trump promised a vicious revenge tour when he ran in 2024 and he’s put Attorney General James at the top of his list, and we’re ready to respond to these attacks,” the spokesperson said.

The legal scrutiny of James intensified last month when her attorney requested that the DOJ dismiss the referral, arguing that the call to prosecute her amounted to “improper political retribution.”

Desperate to fight off mortgage fraud allegations — Big Tish comes completely UNGLUED after announcing yet ANOTHER lawsuit against the Trump admin.

Holy smokes. pic.twitter.com/5BaCMtgCzx

— Western Lensman (@WesternLensman) May 5, 2025

That request followed Pulte’s formal letter to U.S. Attorney General Pam Bondi on April 14, in which he accused James of claiming a Virginia property as her primary residence in an allegedly fraudulent mortgage application.

Records reviewed by federal officials reportedly show that James was listed as a co-borrower on the property, which was being purchased by her niece.

The circumstances surrounding her role in the transaction are part of the DOJ’s ongoing review.

The full text of the state budget bill is expected to be released publicly later Wednesday.

As written, the $10 million legal defense fund is likely to be subject to increased scrutiny, particularly if it is used to shield high-ranking state officials from federal prosecution.

The Trump administration has indicated it will pursue accountability for past actions by state officials that it believes may have crossed legal boundaries, including actions taken during the Biden-Harris administration.

The legal outcome of the James case could serve as an early test of that commitment.

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