Trump administration ramps up pressure! Reports say the US Department of Justice has launched a criminal investigation into Federal Reserve's Cook.

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On Thursday local time, according to media reports citing informed U.S. officials, the U.S. Department of Justice has launched a criminal investigation into Federal Reserve Governor Lisa Cook and issued subpoenas as part of an investigation into whether she submitted false information on mortgage applications.

The initial investigation focused on Cook's properties in Ann Arbor, Michigan and Atlanta. Investigators have involved a grand jury in the probe.

This investigation follows two previous criminal referral recommendations. The recommendations were made by Bill Pulte, appointed by Trump as head of the Federal Housing Finance Agency (FHFA). Pulte has publicly accused Cook of mortgage fraud. Trump has also used these allegations to push for Cook’s removal from the Fed Board and to try to assert control over the traditionally independent central bank.

Cook’s attorney, Abbe Lowell, did not respond to requests for comment. A Justice Department spokesperson declined to comment.

Last month, Cook filed a lawsuit, claiming Trump’s move to dismiss her was illegal. She argued that Trump “fabricated” the reasons for her dismissal to free up a Fed Board seat for his agenda to undermine the central bank’s independence.

The Federal Reserve Act allows the President of the United States to remove a Fed Governor “for cause.” The Trump administration says the president has the right to dismiss Cook. Cook’s lawyers stated in court documents filed Tuesday that she “never committed mortgage fraud.”

Pulte accuses Cook of misleading banks on multiple loan applications in order to obtain more favorable loan terms, such as lower interest rates typically reserved for owner-occupants.

Currently, a judge is considering Cook’s emergency request to prevent her removal from the Fed Board during the course of the case. The Fed’s next FOMC meeting is scheduled for September 16.

If the President succeeds in replacing Cook with an ally, Trump appointees would become the majority on the Fed Board. Last month, Trump told reporters regarding efforts to remove Cook: “We’ll have a majority very soon.”

Trump has repeatedly criticized Fed Chair Powell for not wanting to cut rates and has called for his resignation. Although Trump has publicly stated he wants to remove Powell, no action has been taken so far. He has also accused Powell of mismanaging the expensive renovation of the Fed’s Washington D.C. headquarters.

The DOJ investigation is being coordinated by Ed Martin, a senior Justice Department official appointed by Attorney General Pam Bondi to investigate mortgage fraud by public officials. Martin is a staunch Trump supporter, having served as acting U.S. Attorney for D.C. early in the Trump administration, but left office after failing to gain enough Republican support due to his previous support for some “1/6 Capitol riot” defendants.

The investigation into Cook is one of the latest DOJ cases targeting Trump’s political adversaries. Previously, the DOJ launched similar mortgage-related investigations into New York Attorney General Letitia James and California U.S. Senator Adam Schiff, both outspoken Trump critics.

In 2021, Cook claimed in two different loan agreements that both her Ann Arbor, Michigan, and Atlanta properties were her primary residences. In some cases, banks may allow borrowers to list two locations as 'primary residence,' and proving mortgage fraud usually requires evidence of intent beyond paperwork declarations.

Pulte also accused Cook of irregularities in a third loan, which was for a condominium in Cambridge, Massachusetts. In the 2021 loan agreement, Cook listed it as a “second residence,” but she was earning rental income from it at the time. While the loan terms did not prohibit renting, they required the owner to primarily use the property as a second residence.

Felony mortgage fraud convictions are relatively rare. According to data from the U.S. Sentencing Commission, there were 38 federal mortgage fraud offenders in 2024, with an average sentence of 18 months.

A 2023 report from the Philadelphia Fed indicated that one-third of single-family home investors made false occupancy claims on their mortgage applications.

New York real estate lawyer Massimo D’Angelo said that as long as borrowers make regular payments, many lenders do not care about inconsistencies in loan applications. Proving mortgage fraud typically requires evidence of deception and that the lender suffered harm as a result. Establishing fraud usually requires a degree of evidence disclosure and sworn testimony from witnesses.

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