Former Michigan Supreme Court Justice imprisoned for fraud

by: jim kouri | published: 06 02, 2013

A bank fraud suspect who once sat on the bench of the highest court in the state of Michigan will be spending the next year of her life behind bars, the U.S. Attorney's office reported on Tuesday.

Diane M. Hathaway, a former Michigan Supreme Court Justice, was sentenced Tuesday to one year and one day in federal prison after having pleaded guilty in January to committing bank fraud in connection with a property in Grosse Pointe Park, Mich.

Judge Hathaway resigned after the Michigan Judicial Tenure Commission called for her suspension in January 2013. The Commission recommended Hathaway's immediate suspension from the court while the matter was investigated. As a result of the action, Hathaway announced her resignation from the court. Since Hathaway retired, this matter no longer falls within the jurisdiction of the Judicial Tenure Commission.

At the time of her plea before U.S. District Judge John Corbett O’Meara, the 58-year-old Democrat admitted that between 2010 and 2011, she "knowingly engaged in a scheme" to defraud ING Direct bank by concealing assets from the bank to qualify for a “short sale.”

According to the prosecutor, a short sale is the forgiveness of debt by the bank to a borrower who claims financial hardship.

Besides her 366-days in prison, Hathaway was ordered to pay restitution to the ING in the amount of $90,000.

She will also serve two-years on probation once released from prison.

Michigan Attorney General Schuette said, “Public corruption scandals have damaged the public’s trust in government and tarnished our state’s reputation. No matter who you are or what position you hold, the same rules apply. I supported U.S. Attorney Barbara McQuade’s request for prison time, and I appreciate her efforts, along with those of FBI Special Agent in Charge Bob Foley, to bring this case to a close.”

Matt Frendewey, director of communications for the Michigan Republican Party, issued the following statement:

"Justice Hathaway's real estate scam involved transferring properties out her and her husband's name into the name of their children in order to obtain a short sale. Her actions are offensive to the many Michigan families who have faced difficult times during Michigan's economic down turn. As a justice on the highest court in Michigan, Hathaway's involvement in the alleged scam, the FBI investigation, and today's [event] undermines her ability to effectively sit in a position of judgment over Michigan citizens and the state's judicial system."

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