Wall Street bankers are throwing shade on New York AG Tish James’s sensational fraud accusations against the popular Zelle payments platform – claiming it looks like a cheap stunt to divert attention away from her own legal woes, On The Money has learned.
On Thursday, James was dealt a major blow when her own mortgage-fraud case against President Trump – and the nearly $500 million against him – was tossed by a New York appellate court skeptical of the evidence the AG presented in the case.
That’s after she filed another lawsuit last week in New York State Supreme Court, essentially claiming that Zelle was plagued with scammers while its founders – big banks like JP Morgan, Bank of America and Wells Fargo – stood idly by and allowed a billion dollars’ worth of fraud to flourish under their collective noses.
The truth is more complicated, the bankers tell On The Money, and they may have a point. For starters, she filed her Zelle suit on Aug. 13 – just as a DOJ investigation was ramping up into whether James, seeking a better interest rate on a property she was buying in Virginia, misled bank officials about her residence.
“The timing of this Zelle case is interesting,” said one bank insider. “Seems like James is looking to change the subject from her own problems.”
James is alleged to have stated in 2023 bank documents her principal residence was Virginia not New York. James denies the charges. She has claimed they are politically motivated by her own mortgage fraud case against Trump.
Trump, of course, claims that James’s case against him lacked merit and was politically motivated, noting that she brought it after vowing during her NY AG campaign to bring charges against him, in violation of professional ethics.
A press rep for the NY AG’s office had no immediate comment on the appellate decision. As for the Zelle case, a spokesman said: “The Office of the Attorney General conducted a thorough investigation into Zelle’s security failures that enabled massive amounts of fraud and we stand by our findings and our work to protect New Yorkers.”
Zelle officials say they had no warning last week about the case being filed, which is standard procedure.
“This lawsuit is a political stunt to generate press, not progress,” a Zelle spokesperson told On The Money in a statement. “This is nothing more than a copycat of the Consumer Financial Protection Bureau lawsuit that was dismissed in March. Despite the Attorney General’s assertions, they did not conduct an investigation of Zelle.”
The spokesman added, “Had they conducted an investigation, they would have learned that more than 99.95 percent of all Zelle transactions are completed without any report of scam or fraud – which leads the industry.”
Indeed, the case is a leftover from the CFPB, the controversial federal agency that President Trump is looking to dismantle, and dropped after Trump took over because it looked pretty weak.
The vast majority of the ripoffs occurred between users operating on the platform by exchanging money, not people hacking into Zelle accounts and pilfering funds or Zelle employees doing something nefarious.
The typical so-called fraud involved someone looking to buy concert tickets or even puppies, and making a Zelle transfer of cash to someone else who took the money and ran.
For the record I’m not defending this behavior, or saying Zelle should be open to bad actors. But based on James’ allegations, what happened was a far cry from her sensationalized claim that Zelle is running a network “teeming with fraudsters who have stolen staggering sums from consumers.”
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
