Michigan Supreme Court Justice Diane Hathaway has been charged with federal bank fraud amid allegations that she illegally transferred her Florida property to qualify for a short sale on her home in metro Detroit.
The charge claims that Hathaway fraudulently transferred a home in Windermere, Fla., out of her name before telling financial institution ING Direct she needed to sell her Grosse Pointe Park home by short sale because she couldn’t afford the house payments.
The allegations originally arose last spring and after the Michigan Judicial Tenure Commission filed a complaint against her and sought her suspension, she announced on Jan. 7 that she will retire effective Monday.
Michigan Supreme Court Chief Justice Robert Young Jr. said Saturday that the charge and Hathaway’s retirement “bring to a close an unhappy, uncharacteristic chapter in the life of this court.”
“When any elected official is charged with serious misconduct, the public’s faith in its government institutions can suffer,” Young said in a statement he e-mailed to the Detroit Free Press. “This court, as an institution, will do what we always strived to do: to uphold the highest ethical standards, render the best public service in promoting the rule of law for everyone, and do our utmost to deserve the trust the public has placed in us.”
In the complaint, filed Friday in the U.S. District Court in Detroit, investigators say Hathaway transferred properties to others in January 2010 and November 2011 to hide her ownership interest from ING Direct. But in the process, she was negotiating with ING to sell her house at 15834 Lakeview Court in Grosse Pointe Park for less than she owed on the mortgage, claiming she could no longer afford the house, according to the complaint.
Hathaway allegedly failed to notify the bank about available money and the recent property transfers in a Dec. 10, 2010, hardship letter that asked for a short sale of the Lakeview Court property. The complaint says Hathaway made “false and fraudulent statements and omissions” to ING banking officials in the letter, that was supposed to list her assets and income.
Hathaway is set to receive a portion of her annual salary as a Supreme Court justice of $164,610 a year. Having earlier served 16 years on the Wayne County Circuit Court, Hathaway is vested in the Michigan Judges Retirement System. Her specific pension amount was not available at this time.
The maximum penalty for conviction of bank fraud is 30 years in prison.