Detroit Feds Pinch Recently-Resigned State High Court Justice On Charges Related To Alleged Illegal 'Short Sale Shuffle'

In Lansing, Michigan, The Detroit News reports:

• Former Michigan Supreme Court Justice Diane Hathaway is scheduled to appear Jan. 29 in federal court on a bank fraud charge stemming from a real estate scandal that caused her to resign from the high court Monday.
  
  Hathaway is expected to enter a plea on the charge during a 10:30 a.m. appearance before Judge John Corbett O'Meara at the federal building in Ann Arbor. The U.S. Attorney's office in Detroit on Tuesday confirmed the date of the court appearance.
  
  Federal prosecutors filed a bank fraud charge Friday against Hathaway, accusing her of concealing and transferring assets to stepchildren in a scheme to fool mortgage lender ING Direct into believing she and her husband, attorney Michael Kingsley, had a financial hardship.
  
  The bank approved the couple for a short sale, allowing Hathaway and Kingsley to unload a $1.5 million Grosse Pointe Park home for about $600,000 less than they owed. The charge is listed as a criminal "information," meaning a guilty plea is likely.
  
  Though the maximum penalty for bank fraud is 30 years in prison, federal sentencing guidelines call for 27 to 33 months in prison for someone facing a first offense and who defrauds a bank of more than $400,000, according to Wayne State University law professor Peter Henning.
  
  Hathaway's attorneys have previously argued she and Kingsley saved the bank money by not allowing the home overlooking Lake St. Clair to fall into foreclosure and be subjected to an auction, where the sale price could fluctuate.
  
  In a related civil case, U.S. Attorney Barbara McQuade is trying to seize Hathaway and Kingsley's second home in suburban Orlando, valued at $664,000 in 2010, to compensate for the $600,000 in mortgage debt the couple allegedly defrauded the bank.
  
  Kingsley has not been charged.
  
  Public and legal scrutiny of the questionable short sale caused Hathaway to resign her seat on the Supreme Court halfway through an eight-year term. Before being elected to the Supreme Court in 2008, Hathaway was a Wayne County judge.
  
  Hathaway, a Democratic Party nominee, is the first sitting Supreme Court justice to be charged with a crime since 1975 when Justice John Swainson was indicted for bribery and lying to a federal grand jury. Swainson, a former governor, later beat the bribery charge, but served a brief sentence for a perjury conviction.

Source: Justice Hathaway in court Jan. 29 for fraud charge in real estate case.