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Federal Housing Finance Agency (FHFA) Director William Pulte sent a criminal referral to Attorney General Pam Bondi in May alleging that California Democrat Sen. Adam Schiff “has, in multiple instances, falsified bank documents and property records to acquire more favorable loan terms, impacting payments from 2003-2019 for a Potomac, Maryland-based property.”
What is the gist of the complaint? That Schiff, while representing a California district in the House of Representatives, falsely listed his posh Maryland home as his primary residence in order to get more favorable loan terms when, in truth and in fact, his California condo, which he designated as his primary residence in order to qualify for a California homeowner’s tax exemption, was his real primary residence.
Even worse, according to the referral, Schiff claimed his Burbank condo as his primary/principal residence in California tax filings during the same years he listed his Maryland home as his primary/principal residence on loan applications to finance that home.
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Schiff’s response to the criminal referral and to subsequent Truth Social posts by President Donald Trump was one we often see in white collar cases. Per the senator’s office, “the lenders who provided the mortgages for both homes were well aware of then-Representative Schiff’s Congressional service and of his intended year-round use of both homes, neither of which were vacation homes.”
That’s not much of a denial, senator. The question is whether you lied on these forms or not. Were your answers accurate or not, and if they were inaccurate, were the answers a mistake or intentional?
The devil is always in the details in white-collar cases like this. Which representatives of which particular lenders “were well aware” that Schiff intended to use both homes year-round, and why does that matter?
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The issue is whether Schiff intentionally lied on federal or state forms to gain a financial advantage. If he falsely listed his Maryland home as his primary residence in order to get a lower interest rate, that matters too. (After all, similar alleged falsehoods by Donald Trump were used by New York Attorney General Letitia James to go after Trump in her massive New York state civil action.)
Did Schiff lie on California tax forms to gain an exemption he was not entitled to, and, if so, does it implicate any federal criminal statutes? This is what inquiring minds want to know, and we just don’t have enough information at this stage to know all the answers.
Based on what we do know, how likely is it that Schiff will be indicted for violating one of several federal bank fraud statutes that potentially cover his conduct? Not very likely. Here are several reasons why:
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- Venue for a federal prosecution would be in Maryland, Washington, DC, or the U.S. District Court for the Central District of California. The jury pool in each of these districts is overwhelmingly liberal and Democratic. Chances of a conviction are minute unless the crime was blatant and the evidence strong.
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- The statute of limitations for most federal financial fraud crimes is 10 years, and the last allegedly false statement Schiff made on a bank loan form was in 2013. FHFA Pulte’s criminal referral apparently attempts to get around this problem by noting that Schiff’s alleged falsification was done to, “acquire more favorable loan terms, impacting payments from 2002-2019.” In other words, the fraud continued until 2019, because Schiff continued to benefit from lower interest rates brought about by his false statements, which brings his conduct within the statute of limitations. This will not work for 18 U.S. Code Section 1014, the federal criminal statute covering false statements on loan applications, because the crime is the false statement itself. It could conceivably work for the general mail, bank, and wire fraud statutes, but this is by no means a sure thing.
The devil is always in the details in white-collar cases like this. Which representatives of which particular lenders “were well aware” that Schiff intended to use both homes year-round, and why does that matter?
- It is not at all clear to me that Schiff wrote anything false at all by listing the Maryland house as his primary residence on a bank loan form. After all, it is where he and his family resided most of the time. We would need to closely examine all pertinent loan documents, including instructions and definitions for how to fill out the forms. Barring an explicit written instruction on the loan documents directing Schiff to designate his primary residence as any house where he was claiming a homestead exemption, he is probably in the clear on a federal bank fraud charge.
This leaves open the possibility of a state of California prosecution for filing false tax returns. Would you care to place any bets on that happening? The bottom line is this: Schiff’s alleged conduct may be sleazy and his explanation shifty, but a criminal charge at the federal or state level does not seem to be in the offing.
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