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Disgraced Ex-Mich. Judge Gets Prison For Fraud

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Diane Hathaway (Credit: Courts.mi.gov)

Diane Hathaway (Credit: Courts.mi.gov)

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ANN ARBOR (WWJ/AP) - Former Michigan Supreme Court Justice Diane Hathaway was sentenced Tuesday to a year and a day in prison for concealing assets and fooling a bank in the short sale of a Detroit-area home that freed her from a big debt.

Hathaway appeared in federal court, four months after pleading guilty to bank fraud and quitting the Supreme Court, where she had been a justice since 2009.

“I stand before you a broken person,” said Hathaway, 59, crying as she addressed U.S. District Judge John Corbett O’Meara. “I am ashamed, embarrassed, humiliated and disgraced.”

The fraud charge wasn’t related to her work at the court, but authorities said Hathaway’s expertise in real estate and law was a factor in the scheme.

In short sales, banks let distressed owners sell properties for less than what’s owed on them, providing a significant benefit to borrowers who can’t afford to keep paying the mortgage but want to avoid foreclosure.

The 2011 sale on Hathaway’s Grosse Pointe Park home erased the balance of her mortgage, $664,000. Prosecutors said she pleaded hardship while still possessing more than $1 million in assets, including a debt-free home in Windermere, Fla.
Hathaway and husband Michael Kingsley put the Florida home in a relative’s name while dealing with ING Bank, then got the property back in their names in 2012.

The government recommended a sentence of a year to 18 months in prison, while Hathaway asked for probation and community service.

The 366-day sentence will allow Hathaway to get time off for good behavior, meaning her actual time in custody likely will be nine to 10 months.
Defense attorney Steve Fishman said Hathaway’s name and reputation have a “permanent stain.”

“Is that enough? I say it’s enough,” he told the judge as he sought to keep her out of prison.

Outside the courthouse, WWJ’s John Hewett asked Fishman about Hathaway’s emotional state.

“I am not a psychologist … but think! What do you think? This is a 59-year-old woman who’s obviously not been in any kind of a custody situation who’s got to go to a custody situation,” Fishman said. “Of course she’s not happy and of course she’s apprehensive. These things are obvious.”

WWJ Legal Analyst Charlie Langton, who’s been following the case, said he’s not surprised by the sentence.

“What the feds are trying to do is rid Detroit, rid this area, and rid the state of public corruption,” Langton said. “Justice Diane Hathaway — former Justice Diane Hathaway — had to go to prison…”

Added Langton, “You had to give it to her, at least admitting that she did something wrong — but she’s a Supreme Court Justice, or was … and what she did was commit bank fraud: a crime of dishonesty. For her not to go to jail would be really a travesty. I mean, she has to set an example.”

Gov. Rick Snyder appointed David Viviano to replace Hathaway on the Supreme Court, extended the Republican majority to 5-2.

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 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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