The Justice Department’s recent criminal probe into Federal Reserve Governor Lisa Cook has sent shockwaves through Washington and the financial world, raising questions about both the motivations behind the investigation and the standards by which public officials are scrutinized. At the heart of the controversy is an allegation that Cook committed mortgage fraud by listing more than one property as her primary residence—an act that, if proven intentional, could carry serious legal consequences. But as the details emerge, the case appears more tangled in politics and process than in clear-cut criminality.
On September 4, 2025, according to The New York Post and The Wall Street Journal, the Justice Department formally launched a criminal investigation into Cook. Subpoenas were issued in Georgia and Michigan, two states where Cook owns property (she also owns a home in Massachusetts). The central question: Did Cook misrepresent her homes as primary residences when applying for mortgages, potentially to secure lower rates? A grand jury in Atlanta is now investigating, and sources familiar with the matter have suggested that an indictment is possible.
This probe didn’t arise from a routine audit or a tip from a watchdog agency. Instead, it was triggered by a criminal referral from William Pulte, the newly appointed director of the Federal Housing Finance Agency (FHFA) and a major GOP donor. Pulte, who took the helm earlier this year after being appointed by former President Donald Trump, accused Cook of fraud in a move that experts and former officials have described as highly unusual, if not outright bizarre. "It’s very bizarre for Pulte to be the one making a criminal referral himself and it’s not coming from the IG’s office," Janell Byrd-Chichester, a former chief of staff at FHFA, told The Guardian. Typically, such referrals would come from the FHFA’s Office of Inspector General (OIG), which is staffed with experienced investigators and lawyers. The OIG’s independence is designed to protect the privacy of borrowers and ensure that investigations are based on substantial evidence.
Pulte’s direct involvement has raised eyebrows across the political spectrum. Guy Cecala, executive chair of Inside Mortgage Finance, told The Guardian, "It’s certainly unusual, if not unprecedented, for the director of FHFA to make a single request to the justice department that someone be investigated for alleged mortgage fraud." He added that historically, prosecutions for misrepresenting occupancy on a mortgage application are rare, especially when the loans are not in default or causing financial loss.
The case took on a political dimension almost immediately. President Trump, seizing on Pulte’s referral, attempted to fire Cook last week. He accused her of "deceitful and criminal conduct in a financial matter," a charge Cook has firmly denied. In response, Cook filed a lawsuit challenging Trump’s attempt to remove her, arguing that any inconsistencies in her mortgage paperwork were disclosed during her confirmation process and were known to the White House and Senate. Her lawyer, Abbe Lowell, called the matter a "clerical error" and argued in court that Cook is being targeted for her opposition to Trump’s push for lower interest rates. "She won’t go along with any interest rate drop," Lowell told DC US District Judge Jia Cobb during a hearing on September 5, 2025.
Lowell contended that Trump, frustrated by his inability to force Federal Reserve Chair Jerome Powell to cut rates, was now "taking a swing at the next person at the plate." The implication: Cook’s legal troubles are less about mortgage paperwork and more about political payback. Meanwhile, Cook’s emergency request to block her termination is currently under consideration by Judge Cobb.
On the other side, the Justice Department’s position—articulated by DOJ lawyer Yaakov Roth—is that if Cook’s misstatements were intentional, they would constitute criminal conduct. Even if the inconsistencies were merely negligent, Roth argued, they could make Cook unfit for her role and provide grounds for her dismissal. Roth also dismissed the relevance of whether Cook had disclosed the mortgages during her confirmation, focusing instead on the accuracy and intent behind the filings.
The investigation is being led by Ed Martin, a special assistant US attorney appointed by Attorney General Pam Bondi to focus on mortgage fraud cases involving public officials. The US Attorneys’ offices in the Northern District of Georgia and the Eastern District of Michigan are also involved, underscoring the seriousness with which the matter is being treated—at least officially.
But the roots of the referral remain murky. Pulte has refused to explain why his agency initiated the inquiry into Cook. Intriguingly, he has made similar criminal referrals against other political figures who are rivals of Trump, including New York Attorney General Letitia James and California Senator Adam Schiff. This pattern has fueled widespread speculation that the Cook investigation is politically motivated, part of a broader effort to reshape the Federal Reserve Board with Trump loyalists. As The Guardian noted, the origins of Pulte’s inquiry are significant because misrepresenting occupancy on a mortgage application—while technically a breach of contract—has rarely been prosecuted as a crime, particularly when the loan in question is performing and not in default.
Adam Levitin, a Georgetown University law professor, weighed in on the legal merits of the case on the blog Credit Slips. "If Cook broke her promise about property use (and that isn’t clear), all that shows is a breach of contract," he wrote. "For it to be fraud, she would have to have never intended to perform the promise in the first place. Pulte has no evidence whatsoever about Cook’s intent at the time she took out the mortgage. He hasn’t even shown a breach of contract, much less common law fraud, not to speak of a federal criminal law violation." Levitin further pointed out that issues with Cook’s loan file weren’t caught by any routine process, but only because Pulte directed Fannie Mae or Freddie Mac to pull her application—a step he called "unheard of."
The case is also unusual because there appears to be no actual financial loss or mortgage default. Cecala explained that after the 2008 financial crisis, government-sponsored enterprises like Fannie Mae and Freddie Mac began randomly sampling performing mortgages for potential risks. But even when problems were found, it was rare for them to seek criminal punishment. "They’ll just say, we see a problem with this mortgage and they just require the lender who made the loan to buy the loans back out of Fannie Mae and Freddie Mac securities," Cecala said.
Adding to the oddity, Texas Attorney General Ken Paxton and at least three former Trump cabinet members have similarly listed multiple properties as primary residences without facing criminal scrutiny. This inconsistency has led many observers to conclude that Cook’s case is less about enforcing mortgage law and more about political maneuvering.
As the legal and political drama continues to unfold, all eyes are on Judge Cobb’s upcoming decision and on whether the Justice Department’s investigation will lead to formal charges. For now, the case stands as a stark example of how legal process, political ambition, and personal accountability can collide at the highest levels of government.
