Recently, the Department of Justice launched an investigation into members of the Federal Reserve Board, involving Lisa Cook. The investigation was triggered by allegations that she provided false information in a mortgage application. The aim is to gain a deeper understanding of the potential impact of the allegations on Chairman Jerome Powell.

According to reports, this investigation is led by federal prosecutors who are collecting evidence related to Cook's properties in Ann Arbor, Michigan, and Atlanta, Georgia, through a grand jury, as reported by The Wall Street Journal.

The investigation was initiated by Bill Pulte's legal actions, who was nominated by President Trump to lead the Federal Housing Finance Agency. Pulte submitted two criminal complaints to the judicial authorities, accusing Lisa of mortgage fraud. Trump used this accusation to support his move to remove her, with the aim of replacing her with someone who would support him. Trump has stated to the media that he hopes to have a majority on the Fed board as soon as possible.

Lisa's lawyer Abbe Lowell did not make any public comments, and the Justice Department also declined to respond to the matter. However, court documents indicate that Lisa believes the White House's actions are merely fabricated reasons to overturn her in order to advance its political agenda.

Lisa filed a lawsuit last month, claiming that Trump's attempt to fire her was illegal, and she is seeking an emergency order to prevent her from being terminated during the case proceedings.

On the other hand, the White House stated that under the Federal Reserve Act, the President can remove Fed members for "legitimate reasons" and insisted that their actions fall within the scope of authority. Lisa's legal team countered that she has never engaged in fraud, and her true intention was to undermine the independence of the Fed and force Powell out.

The core of the issue lies in the three mortgage applications handled by Lisa. The first two involve properties she owns in Ann Arbor and Atlanta. Both are marked as her primary residence in the loan documents, which were submitted in 2021. This in itself is not illegal, as some lenders allow this situation, but Pulte believes she used it to obtain a low interest rate that is only available to owner-occupants. The third property is a condominium located in Cambridge, Massachusetts, listed as her second residence, from which Lisa earned rental income during that time.

Pulte claims that the loan in Cambridge also violated regulations because its terms require the property to be primarily used by the owner, rather than rented out. However, the loan documents do not explicitly prohibit renting. Lisa did not deny collecting rent, but insists she did nothing wrong.

This investigation is led by Ed Martin, a senior official in the Department of Justice, who was appointed by Attorney General Pam Bondi to investigate mortgage fraud by public officials. Ed served as the acting U.S. Attorney for Washington, D.C. during the early stages of Trump's re-administration but failed to secure Senate confirmation due to his support for defendants of the January 6 Capitol riot.

Lisa is not the only Trump opponent facing legal pressure. Similar mortgage fraud allegations have also been made against New York Attorney General Letitia James and California Senator Adam Schiff, both of whom are strong critics of the president. Lisa's investigation appears to be part of a broader federal action against individuals perceived as political threats.

But in reality, the likelihood of going to prison in the U.S. for mortgage fraud is very low. According to the most recent data, only 38 people were sentenced for federal mortgage fraud last year, with an average prison term of only 14 months among thousands.

In addition, the Federal Reserve Bank of Philadelphia reported in 2023 that about one-third of single-family residential investors falsely claimed to live in the properties they purchased to receive benefits. This means that proving fraud also requires proving intent. Lisa's defense relies on this point, arguing that even if there are errors in the documents, she did not have the intent to deliberately mislead anyone.