Then-Attorney General Jeff Session fired McCabe in March 2018 after the inspector general found he had frequently misstated his involvement in a leak to the Wall Street Journal regarding an FBI investigation into the Clinton Foundation.
An indictment of McCabe would refocus public attention on the chaotic months of 2016 when the FBI was entangled in presidential politics through investigations touching both main contenders - Democrat Hillary Clinton and Trump, her Republican opponent.
McCabe authorized the Federal Bureau of Investigation to begin investigating President Trump and has always been a target of the commander in chief's ire.
And while prosecutors are likely to try to keep a narrow focus on whether McCabe lied to investigators on particular dates, McCabe's attorneys are expected to argue that the prosecution is part of a political vendetta driven by the president.
After he was sacked by Attorney General Jeff Sessions in 2018, McCabe set up a GoFund me page and received more than $500,000.
They were told on Thursday that the Justice Department had rejected their appeal, according to two sources familiar with the decision who spoke on condition of anonymity. Former Acting Attorney General of the United States Matthew Whitaker even made an appearance on Fox News, during which he said he believed there were indications that McCabe was "imminently going to be charged". "We are confident that, unless there is inappropriate pressure from high levels of the Administration, the U.S. Attorney's Office will conclude that it should decline to prosecute".
McCabe's lawyers still have the right to request a meeting with Barr over the matter, the person said.
Rep. Mark Meadows, R-N.C., who is stepping down as Chairman of the House Freedom Caucus and who was vested over the past several years in investigations into the FBI probe of Trump, told this reporter Thursday, that the American people deserve justice and the truth.
Trump has repeatedly urged the Justice Department to investigate McCabe, Comey, Mueller and other law-enforcement officials involved in the investigation, accusing them of political bias and conflicts of interest.
He sued the Justice Department in August, saying officials had used the inspector general's conclusions as a pretext to rid the Federal Bureau of Investigation of leaders Trump perceived as biased against him.
The report said McCabe ultimately corrected that account, and confirmed that he had encouraged the conversation with the reporter to counter a narrative that he thought was false - namely, that he had been trying to stymie investigations into Clinton and the foundation.
While Attorney General William Barr has authorized several investigations into the origins of the Russian Federation probe, McCabe would be the first senior official to face criminal charges. Terry McAuliffe, a Clinton ally, had helped fund an unsuccessful bid by McCabe's wife for a Democratic Virginia state Senate seat in 2015 when he was the state's governor.
The Justice Department declined to prosecute Comey after the IG's office found that he had improperly handled memos he wrote about his one-on-one meetings with Trump before he was sacked.