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Feds Accuse Michigan Judge Of Real Estate Fraud

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LANSING (WWJ/AP) – Federal authorities have filed a lawsuit accusing Michigan Supreme Court Justice Diane Hathaway of fraud in a real estate transaction.

Hathaway is not charged with a crime, but the government wants to seize her Florida home.

A lawsuit filed Monday in Detroit says Hathaway and husband Michael Kingsley put the home in the name of Kingsley’s daughter while they tried to persuade a bank to allow a short sale on their home in Grosse Pointe Park.

The lawsuit says the Windermere, Fla., home was put back in the couple’s hands after the short sale was approved. The government says ING Bank was unaware of the property shuffle.

READ THE COMPLAINT (PDF)

Hathaway attorney Steve Fishman won’t comment on reports that the FBI is looking at the transactions. He’s said there’s nothing “underhanded.”

In part, the complaint states:  Evidence that the Defendant Property constitutes proceeds, or property traceable thereto, of Financial Institution Fraud in violation of Title 18, United States Code, Section 1344, and/or was proceeds of, or property traceable thereto, or property involved in Money Laundering in violation of Title 18, United State Code, Section 1956, includes, but is not necessarily limited to, the following:

  • a. On December 10, 2010 Hathaway and Kingsley submitted a hardship letter to ING Bank in support of their request to be forgiven a debt of $600,000 in a “short sale” submitted transaction of their residence in Michigan.
  • b. Prior to the submission of the hardship letter and with intent to defraud, Hathaway and Kingsley systematically and fraudulently transferred property and hid assets in order to support their claim to ING that they did not have the financial resources to pay the mortgage on the Michigan property.

Earlier Tuesday, before news of the lawsuit, Hathaway, in an email to court staff and other justices denied speculation that she was quitting the court.

WWJ Lansing Bureau Chief Tim Skubick on Tuesday asked Chief Justice Robert P.Young, Jr. what he knows about it. “Nothing. I’ve not heard from … Justice Hathaway, and I hear rumors, but they’re only rumors,” Young said.

Young said Hathway’s clerk has left the office, but that’s not necessarily an indication of anything.  He said he would expect to be informed if Hathaway was leaving.

Hathaway has been in the spotlight since Detroit TV station WXYZ last spring reported about questionable real estate transactions.

MORE: Michigan Justice In Hot Seat Over House Transfers

(TM and © Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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