Documents raise questions about fraud claims against Fed governor

Lisa Cook, a Michigan State University economics professor, in Ann Arbor, Mich., Jan. 10, 2019. New documents reviewed by The New York Times appear to add to the uncertainty surrounding some of the Trump administration’s claims about Cook. They raise the possibility that Ms. Cook did not try to deceive lenders about one of the properties when she purchased it before joining the board of the nation’s central bank in 2022. (Brittany Greeson/The New York Times)

By TONY ROMM, BEN CASSELMAN and COLBY SMITH

President Donald Trump has sought to oust Lisa Cook from the Federal Reserve on grounds that she committed mortgage fraud, by falsifying crucial records to obtain more favorable terms on a home loan.

But new documents call that narrative into question.

A loan record reviewed by The New York Times suggests that Cook did not try to deceive lenders about one of the properties, a home in Atlanta, that she purchased before joining the nation’s central bank in 2022.

That document, as well as another submitted as part of Cook’s nomination process, complicates Trump’s attempts to remove Cook, days after the government asked a federal court to block her from participating in the Fed’s meeting this coming week, where the central bank is expected to lower interest rates.

On Saturday afternoon, lawyers for Cook referenced the newly unearthed documents in urging a panel of judges to allow her to continue serving. They also warned that Trump’s actions could cause financial havoc and undermine confidence in the central bank.

“This should be case closed on the Cook mortgage issue,” said Adam Levitin, a professor at Georgetown Law. “There is no way to maintain a criminal prosecution in light of the disclosure in Cook’s loan application.”

Cook bought the property, a condominium in Atlanta, in 2021. The president and his top aides have accused Cook of incorrectly claiming both the condo and another property in Michigan, purchased weeks earlier, as her primary residence, seemingly in a bid to secure a lower interest rate on a mortgage.

Trump and his aides contend that this represents fraud, though Cook has not been charged with any wrongdoing or convicted of a crime. But a set of financial records reviewed by the Times — a preliminary loan estimate from a credit union dated May 2021 — offers a possible competing view.

The documents instead classify that Atlanta residence as a “vacation home.” Similar language appears in a second set of records, furnished later that year to the government before Cook’s confirmation to the Fed. In those heavily redacted submissions, the Atlanta condo is described as a “2nd home.”

Kathleen C. Engel, an expert on mortgage fraud at Suffolk University’s law school, said that, in order to prove fraud, prosecutors would need to establish that Cook misled her lender about her intended use of the property.

“The fraud allegation is dramatically weakened by the evidence that this was on her application,” Engel said. “She was candid about how she was using the property.”

She added: “It actually rebuts any inference that she engaged in fraud.”

Cook has said little about her own finances even after Trump took the extraordinary step last month of trying to fire her. Trump’s actions have touched off a landmark legal battle, which could see him expand his power to dismiss members of the central bank, potentially eroding its independence from political interference.

The disclosures do not appear to be legal documents, and they do not prove that Cook was transparent about her intended use of the property throughout the loan application process. But they do suggest that she may have told her lender about her plans at least once.

Lawyers for Cook declined to comment on the disclosures, which were first reported by Reuters. But they referenced a news story about the records in their Saturday filing with the U.S. Court of Appeals for the District of Columbia Circuit, arguing that Cook had been “deprived of a forum in which to offer any evidence” in her defense.

The new revelations did not appear to satisfy Cook’s critics in the Trump administration. The man at the forefront of her ouster — Bill Pulte, the director of the Federal Housing Finance Agency, who first broadcast allegations of fraud — signaled earlier Saturday that the newly released records did not absolve Cook of wrongdoing.

“Dr. Cook represents herself as an extremely accomplished financial operator,” Pulte said in a post on social media. “If Dr. Cook solicited estimates as a vacation home and then entered into a mortgage agreement as a primary residence, that is extremely concerning, and in my opinion, evidences further intent to defraud.”

Pulte previously referred the matter to the Justice Department, which has opened a criminal investigation into Cook. He said in a second post on social media this weekend: “The idea that she got estimates and then declared it as a primary on her mortgage agreement is even more concerning for Dr. Cook.”

But Engel said Pulte was misunderstanding or misrepresenting the mortgage application process. As long as Cook disclosed her plans to use the home as a secondary home to her lender, there is no fraud, she said. Engel said she would not necessarily expect publicly available loan documents to show an acknowledgment from her lender that the property would be used as a second home.

“Pulte would know this, or would have access to people who would know this at FHFA,” she said.