Michigan Supreme Court justice charged with fraud

Published on NewsOK Modified: January 19, 2013 at 5:39 pm •  Published: January 19, 2013
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DETROIT (AP) — Federal prosecutors have filed a fraud charge against Michigan Supreme Court Justice Diane Hathaway, just a few days before she leaves the state's highest court in a scandal involving the sale of a Detroit-area home and suspicious steps taken to conceal property in Florida.

The charge was filed Friday as a criminal "information," which means it was negotiated and that a guilty plea is expected in federal court. Defense attorney Steve Fishman declined to comment Saturday.

Hathaway is resigning Monday, months after a series of questionable real estate transactions first were revealed by a Detroit TV station. Hathaway and her husband, Michael Kingsley, deeded a Florida home to Kingsley's daughter while trying to negotiate a short sale on a house they couldn't afford in Grosse Pointe Park.

In a short sale, a bank agrees to a sale that wipes out any remaining mortgage, a significant benefit for any borrower. The 2011 deal went through and erased the couple's $600,000 debt in Michigan. Five months later, in 2012, the debt-free Windermere, Fla., home worth more than $600,000 went back in their names for $10.

The bank fraud charge says Hathaway made false statements to ING Direct, transferred property to others and failed to disclose available cash — all in an effort to fool the bank into believing she had a severe financial hardship. Kingsley, also a lawyer, has not been charged.

Hathaway has refused to make any lengthy public comments. She told WXYZ-TV last spring that the property shuffles were a private matter.

The maximum penalty for bank fraud is 30 years in prison, although that would be a rare punishment for anyone and very unlikely for Hathaway. Nonetheless, some time in custody should be expected, predicts former federal prosecutor Lloyd Meyer of Chicago.

"Any bank robber who robs a bank with no gun and just a note goes away to prison. A judge who steals over half a million dollars should enjoy the same fate," said Meyer, referring to the amount of debt written off after the short sale. "As a former federal prosecutor, it would be unthinkable to have this type of defendant get a slap on the wrist."



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