It is not the Trump fraud case people are arguing about this time. It is a hairdresser, a trail of loans, and a Justice Department inquiry that arrives after multiple earlier attempts against New York Attorney General Letitia James fizzled.
Federal prosecutors have opened a new criminal investigation into James focused on financial transactions involving her long-time hairdresser, Iyesata Marsh, according to two sources familiar with the matter who spoke to CBS News. The probe is described as early-stage, with investigators asking questions about money James has loaned Marsh over the years.
A new line of questioning, and a familiar political backdrop
The new inquiry adds another chapter to a widening clash between James, a high-profile Democratic attorney general, and a Justice Department that her team says is being deployed against President Trump’s perceived enemies. James became a national figure after pursuing a civil fraud case against Trump while he was out of power, and she has remained a frequent target of pro-Trump attacks.
This latest investigation was first reported by The New York Times, and CBS News confirmed the focus involves James’ financial transactions with Marsh, according to the two sources.
Federal prosecutors are conducting an early-stage inquiry into financial transactions between New York Attorney General Letitia James and her hairdresser. pic.twitter.com/B0kLnfvcBq
— PiQ Newswire (@PiQNewswire) January 8, 2026
What prosecutors are looking at, and what is still unknown
CBS News reported it could not immediately determine what potential crimes investigators are examining in the new probe. One of the sources told CBS News that prosecutors are asking questions about money James has loaned Marsh over the years.
That detail matters because Marsh is already facing separate federal charges. In the Western District of Louisiana, Marsh was indicted on charges of bank fraud and aggravated identity theft connected to a 2019 purchase of a Land Rover, CBS News reported.
Marsh’s attorney, Keith Whiddon, declined to comment to CBS News.
The investigators, and a key appointment problem that keeps surfacing
According to CBS News, the new investigation is being jointly led by the U.S. Attorney’s Office in the Western District of Louisiana and the Northern District of New York.
But the Northern District of New York has its own drama. CBS News reported that John Sarcone, the acting U.S. attorney for the Northern District of New York, has been overseeing two other probes involving James. Those include scrutiny tied to her office’s handling of the civil fraud investigation into Trump and a lawsuit her office filed against the National Rifle Association and certain executives.
Sarcone’s role is now in question. A federal judge disqualified him from serving as acting U.S. attorney, ruling he was not serving lawfully in the position, CBS News reported. The judge also found Sarcone could not be involved in handling the separate probes related to the Trump civil fraud matter and the NRA. As part of that ruling, the judge quashed subpoenas after James challenged Sarcone’s authority following an August subpoena, according to CBS News.
The throughline is hard to miss. The investigations around James are not just about facts and witnesses. They are also getting tangled in fights over whether prosecutors and appointments were lawful in the first place.
A previous indictment that died in court
The new inquiry comes after a separate case against James went through a dramatic rise and collapse, according to CBS News.
A grand jury in the Eastern District of Virginia indicted James last fall over charges that she defrauded a financial institution to obtain a better interest rate on a property she purchased in Norfolk. But in November, a federal judge dismissed that case after ruling that Lindsey Halligan, the U.S. attorney who solely secured the indictment, was unlawfully appointed, CBS News reported.
The Justice Department later tried again and twice failed to secure new indictments, CBS News reported. The department also appealed the ruling that disqualified Halligan.
Those procedural defeats now loom over the new hairdresser-focused inquiry, even before any specific criminal theory has been publicly articulated.
James’s lawyer calls it a vendetta and puts Trump’s name on it
James has not been charged in the new matter. Still, her legal team is already treating it as an extension of a political campaign.
Her attorney, Abbe Lowell, has previously accused the Justice Department of vindictive prosecution, saying she was being unlawfully targeted because of Trump’s animus toward her, CBS News reported.
In a statement provided to CBS News, Lowell went further, tying the new inquiry to earlier failures by federal prosecutors.
“Clearly frustrated by the string of failures in carrying out President Trump’s political vendetta against Attorney General James, his obedient Justice Department appears to be using its vast resources to try to shake down people based on their association with Ms. James,” Lowell said. “Like their earlier attempts, this attack on Ms. James is doomed to fail. The desperation of those working for Trump is palpable and makes indelible the stain already put on this Justice Department. This abuse of justice must end.”
Why the hairdresser connection is combustible
On paper, the alleged focus is narrow: loans and other financial transactions between a public official and a person in her personal orbit. In practice, it is the kind of fact pattern that fuels two competing narratives at once.
One narrative is accountability. If prosecutors have evidence of wrongdoing, even a politically prominent official can face scrutiny like anyone else. The other narrative is weaponization. James is a top Trump antagonist in New York. Her lawyer is saying investigators are using the power of federal prosecution to pressure people around her, after earlier attempts failed.
The early-stage nature of the inquiry, and the lack of clarity on what statutes may be at issue, leaves a vacuum. Into that vacuum step the visible contradictions. Prosecutors are still trying to advance investigations after losing key fights over whether their officials were lawfully in place. James’ team is signaling it will attack the legitimacy of the process as aggressively as it attacks the substance.
What to watch next
There are several pressure points that could decide whether this inquiry becomes a case, or joins the growing stack of procedural setbacks.
First is the scope. CBS News reported that prosecutors are asking about loans James made to Marsh over the years. Whether investigators view those transactions as innocuous personal support, potential reporting issues, or something more serious remains unknown publicly.
Second is staffing and authority. A federal judge has already disqualified an acting U.S. attorney involved in related probes, and another judge previously tossed a separate case after finding a U.S. attorney was unlawfully appointed, according to CBS News. If appointment challenges keep succeeding, even strong factual allegations could face legal obstacles.
Third is collateral fallout. Marsh’s indictment in Louisiana means prosecutors already have an active criminal case involving the person at the center of the financial questions, which could produce documents, testimony, and leverage. Whether that feeds into the James inquiry, and how directly, is not clear from the reporting so far.
For now, the story is less about a single allegation and more about a pattern: federal scrutiny of James keeps returning, just as legal fights over prosecutorial authority keep knocking cases sideways. And James’ camp is making sure one word stays attached to every new development, whether prosecutors like it or not: “vendetta.”
