Michigan Supreme Court Justice Retires After Accusations of Bank Fraud

Mark J. Mandell, Esq.

Amidst federal charges of bank fraud, Diane Hathaway has filed for retirement, stepping down from her post as Michigan Supreme Court Justice. The charge was filed Friday as a “criminal information,” which means it was negotiated and that a guilty plea is expected in federal court. As a result, Hathaway faces the loss of her law license and time in prison.

In order to convince a lender that she qualified for a short sale on her $1.5 million home in Grosse Pointe, Hathaway concealed her ownership of a Florida home by placing the home in husband’s daughter’s name. As a result, the short sale went through in November 2011 and erased the $600,000 debt they had with the bank. Following the short sale, the Florida home was transferred back to Hathaway in March 2012. Hathaway has refused to make any public comments explaining the transactions; instead, she claims that the property shuffle was a private matter.

Now, the judge that sentences her must be concerned with the message that is sent by his decision: “Do you cut a break to a sitting Supreme Court Justice who has to know better?” Peter Henning, a professor at Wayne State University Law School, asked. The maximum penalty for bank fraud is 30 years in prison. While such an extreme sentence seems rare, Hathaway should expect some time in custody. Former federal prosecutor Lloyd Meyer of Chicago believes it “would be unthinkable to have this type of defendant get a slap on the wrist.”

Governor Rick Snyder plans to appoint a replacement. Last year, the Michigan Judicial Selection Task Force made a recommendation for the process, suggesting that when a vacancy occurs on the Michigan Supreme Court, a non-partisan panel should screen candidates and then submit three to five choice from which the governor could choose. As of late, Governor Snyder is conducting his own search, hoping to appoint a replacement sooner rather than later.

Chief Justice Young called the scandal one that “diminishes the public’s trust in government.” Hopefully, Synder’s newest appointee will help to rebuild this trust.

 

If you have questions about criminal matters, fraud or other legal issues, please contact Mark Mandell or Tariq Hafeez at 248.380.0000 or online at www.MichiganFraudLawyer.com.

 
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