The Justice Department has formally opened a criminal investigation into Federal Reserve Board Governor Lisa Cook as part of an effort to determine whether she submitted fraudulent information on mortgage applications, Fox News has learned.
The Justice Department investigation comes just days after Cook filed a lawsuit challenging President Donald Trump‘s attempt to fire her from the panel of central bankers that is tasked with charting the nation’s economic path.
The news threatens to further ensnarl her legal fight to stay on the Fed board, and could postpone an expected ruling from U.S. District Judge Jia Cobb, who ordered both parties to court just last week for a status hearing to consider the matter.
The fraud allegations Trump cited in his move to fire her were first leveled by Bill Pulte, a Trump appointee to the Federal Housing Finance Agency, the federal agency that regulates Fannie Mae and Freddie Mac.
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Pulte linked Cook in two separate referrals to the Justice Department to a trio of mortgages she took out before she joined the nation’s central bank.
The loans, tied to properties in Michigan, Georgia, and Massachusetts, prompted scrutiny over whether Cook had misrepresented how the homes would be used. Trump seized on those allegations in his bid to oust her from her role as a Federal Reserve governor.
Justice Department lawyers stopped short of addressing the investigation in a supplemental memo filed to the court Thursday afternoon.
In it, however, they reiterated their earlier arguments that Trump as president has the power to determine the “for cause” nature of removing a member of the Fed’s Board of Governors. They also noted that, while Cook’s lawyers argued that the alleged actions in question took place prior to her Senate confirmation, they argued she “does not come close to proving that the Senate was aware of her misconduct and confirmed her nonetheless, whether or not that would make a legal difference.”
The criminal investigation opened by the DOJ could further complicate Cook’s fight to stay in her role on the Fed board.
One major argument Cook’s lawyers made in court on Friday was the lack of a formal Justice Department investigation — something they cited as evidence that the allegations against her were unsubstantiated.
Her attorney, Abbe Lowell, argued that the complaints filed by Pulte were merely a “pretext” for Trump to secure a majority on the Fed board, a contention that Judge Cobb admitted made her “uncomfortable.”
The lawsuit Cook’s attorneys filed in federal court last month did not address the allegations, or why Cook listed two houses as a primary residence on mortgage filings.
In a new filing submitted to the court earlier this week, Lowell said Cook “did not ever commit mortgage fraud.”
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Cook’s lawyers sparred with federal attorneys on Friday over the nature of the probe, and whether Trump as commander-in-chief had the “cause” needed to oust her from the board.
Lowell, noted on several occasions that there was no “investigation or charge” from the administration prior to Trump’s abrupt announcement that he would fire Cook.
He also vehemently disputed the Justice Department’s allegations that Cook had an “opportunity” to respond to the mortgage fraud accusations leveled by Pulte, which he noted were made just 30 minutes before Trump called for Cook to be removed.
Lowell argued that it was merely an attempt by the administration to “litigate by tweet.”
The case “obviously raises important questions” about the Federal Reserve Board, Cobb said shortly before adjourning court. She agreed earlier this week to extend a filing deadline for both parties through Thursday, and was expected to issue an order relatively quickly on the matter.
It is unclear if, or to what degree, DOJ’s investigation will impact the lawsuit, or the request for injunctive relief Judge Cobb had been tasked with considering.
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The White House referred queries to the Department of Justice. The Federal Reserve declined to comment. Cook’s lawyers did not immediately respond to Fox News Digital’s request for comment.
Before Cook filed her suit, a Fed spokesperson acknowledged the potential legal feud and wrote in an Aug. 26 statement that the Fed will “abide by any court decision.”
Fox News Digital’s Ashley Oliver, Jake Gibson and David Spunt contributed to this report.
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