(Yahoo!Finance) - Federal Reserve governor Lisa Cook was targeted by the Trump administration on Thursday in a second criminal referral to the Justice Department, claiming that Cook committed mortgage fraud in connection with three separate mortgage loans.
The referral came hours ahead of a high-stakes emergency hearing scheduled in Washington, D.C., on Friday, where Cook is expected to square off against the administration in an emergency request for a judge to block President Trump from firing her from her post.
If granted, Cook could stay on as a Fed governor while her lawsuit is resolved in the justice system.
In a court filing on Thursday, Cook denied that she had committed infractions alleged by the administration in a prior criminal referral on Aug. 15.
In a letter to US Attorney General Pam Bondi on Thursday, US Federal Housing Authority Director William Pulte said that his agency had discovered "what appears to be multiple false representations to the US Government by Cook while she was a Governor of the Federal Reserve."
Specifically, Pulte alleged that Cook represented to the US government that a home she purchased in Cambridge, Mass., was a rental property, yet had described the property as a second home in a bank application to obtain a mortgage to purchase the property.
Pulte's first criminal referral on Aug. 15 alleged that Cook obtained mortgages to purchase homes in Ann Arbor, Mich., and Atlanta by listing both homes as her primary residence on separate mortgage applications.
Pulte alleged that Cook lied to her lenders in order to obtain lower interest rates for the mortgages.
In June 2021, Cook purchased a home in Ann Arbor, Mich., using a mortgage application that designated the property as a primary residence. Cook purchased another property in Atlanta two weeks later, using a mortgage application that also designated the property as a primary residence. The Georgia property was listed for rent the following year in September 2022.
Cook's lawyer, Abbe Lowell, described Cook's mortgage representations as a "clerical error" in a court filing requesting an emergency hearing and said the White House failed to explain how the representations benefited Cook.
"Even if Governor Cook had committed the infractions that the President alleges — which she did not — the President would lack 'cause' to remove her," the document said.
In Pulte's second criminal referral, he alleged that Cook entered into a 15-year mortgage agreement to acquire a condominium in Cambridge, Mass., and designated in a mortgage application with Bank Staff Fund Federal Credit Union that she would "occupy and use the Property as Borrower's second home."
Eight months later, Pulte said, Cook represented to the US government, on Dec. 1, 2021, that she earned $15,000-$50,000 in rental income on the Cambridge property and declared it as an investment or rental property, in conflict with the mortgage application. Subsequent representations to the US government in 2022, 2023, 2024, and 2025, he alleged, also showed the property as an investment.
The administration filed a court document on Friday opposing Cook's injunction request.
It argued that Cook was "highly unlikely" to win her underlying case, reasoning that the Federal Reserve Act's "for cause" standard for terminating members of the Federal Reserve Board shows that Congress vested authority to terminate principal officers in the president.
"And under any standard, making facially contradictory statements in financial documents – whether a criminal burden of proof could be sustained or not – is more than sufficient ground for removing a senior financial regulator from office," the administration's court filing stated, adding that Cook's interpretation of the statute would not permit the president to fire a member of the Fed even if they were convicted of a crime.
A hearing on Cook's request for an injunction is scheduled on Friday at 10 a.m. ET before US District Court Judge Jia Cobb, an appointee of former President Joe Biden.
By Alexis Keenan · Senior Legal Reporter
