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U.S. prosecutors pursue new criminal probe into New York AG Letitia James over financial transactions

By
Sarah N. Lynch
Sarah N. Lynch
Senior Justice Department Reporter
Sarah N. Lynch is the senior Justice Department reporter for CBS News, based in Washington, D.C.
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Sarah N. Lynch,
Jacob Rosen
Jacob Rosen
Justice Department Reporter
Jake Rosen is a reporter covering the Department of Justice. He was previously a campaign digital reporter covering President Trump's 2024 campaign and also served as an associate producer for "Face the Nation with Margaret 91³Ô¹ÏÍø."
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Jacob Rosen

/ CBS News

Federal prosecutors have launched a new criminal investigation into New York Attorney General Letitia James, after a grand jury previously declined to indict her twice on unrelated criminal charges, two sources familiar with the matter told CBS News.

The new probe, which is in its early stages, marks the latest effort by the Justice Department to target one of President Trump's perceived political enemies, after she pursued a civil fraud case against him while he was out of power.

The latest investigation, which was first reported by the , centers on financial transactions between James and her long-time hairdresser Iyesata Marsh, the sources said.

NY Attorney General Letitia James Indicted Over Fraud Claims
Letitia James, New York's attorney general, speaks outside federal court in Norfolk, Virginia, on Friday, Oct. 24, 2025. Eric Lee / Bloomberg via Getty Images

A grand jury in the Eastern District of Virginia indicted James last fall over charges that she had defrauded a financial institution in order to secure a better interest rate on a property she purchased in Norfolk.

The case was dismissed in November, however, after a federal judge ruled that Lindsey Halligan, the U.S. attorney who solely secured the indictment, was unlawfully appointed. 

The Justice Department later tried again and twice failed to secure new indictments in the case against her, and late last year, the department appealed the ruling that disqualified Halligan. 

James' attorney Abbe Lowell has previously accused the Justice Department of vindictive prosecution, saying she was being unlawfully targeted because of Mr. Trump's animus towards her.

"Clearly frustrated by the string of failures in carrying out President Trump's political vendetta against Attorney General James, his obedient Justice Department appears to be using its vast resources to try to shake down people based on their association with Ms. James," Lowell said in a statement to CBS News. "Like their earlier attempts, this attack on Ms. James is doomed to fail. The desperation of those working for Trump is palpable and makes indelible the stain already put on this Justice Department. This abuse of justice must end."

CBS News could not immediately determine what kinds of potential crimes are being investigated in the latest probe.

Prosecutors are asking questions about money that James has loaned Marsh over the years, one of the sources added. 

Last month, Marsh was indicted in the Western District of Louisiana on charges of bank fraud and aggravated identity theft in connection with a 2019 purchase of a Land Rover. 

Marsh's attorney, Keith Whiddon, declined to comment. 

The new investigation is being jointly led by the U.S. Attorney's Office in the Western District of Louisiana and the Northern District of New York, one of the sources said.

John Sarcone, the acting U.S. attorney for the Northern District of New York, has also separately been overseeing two other probes into James and her office's handling of the civil fraud investigation into Mr. Trump and a lawsuit filed by her office against the National Rifle Association and executives there.

His role in all three of those probes, however, is now in question, after a federal judge earlier on Thursday disqualified him from serving as acting U.S. attorney, saying he was not serving lawfully in his position.

In doing so, the judge found he could not be involved in the handling of the separate probes related to the civil fraud investigation and the NRA.

James sought to challenge his authority to preside over the cases after she was subpoenaed in August. As part of his ruling, the judge also quashed the subpoenas.

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