Diane Hathaway is a former Michigan Supreme Court Justice, and is now a convicted felon heading to prison as the result of a complicated real estate scam. Apart from being a justice, Hathaway was also a licensed real estate broker.
At issue was the methodology that Hathaway used to sell her home, doing what is known as a 'short sale.' A short sale is sometimes available for homes which have loan balances against them which far exceed the value of the home itself. Who is determined to be eligible by the bank is based upon the unique financial realities of a customer. If the short sale is granted, a home owner may sell their home for less than is owed to the bank, pay the sum of the sale to the bank, and not owe any remaining balance.
In 2011 Hathaway convinced her bank that she was financially destitute and they allowed her to short sale her home, which held a mortgage valued at $664,000.
All was well until an investigation was launched into Hathaway's personal finances. She owned a $1 million home in Florida, which she transferred to a family member during the short sale process. During this same time Hathaway also used $350,000 cash to buy two homes, while claiming she was broke. Those homes were placed in the legal possession of her step-children.
Once these irregularities were discovered Hathaway's literal house of cards crumbled, as do many cases of open fraud when given mild scrutiny.
At her sentencing, according to wxyz.com, Hathaway said:
Your Honor, I stand before you a broken person.
She went on to claim she was ashamed, humiliated and disgraced in hopes that District Judge John Corbett O'Meara would not impose a prison sentence. She found no such sympathy from the bench she used to serve.
Hathaway was sentenced on May 28 to pay a $90,000 fine, and spend one year and one day in prison. It is possible for her to be released in as few as eight months with good behavior.
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