Michigan: Disgraced high court judge gets a year in jail
A former justice of the Michigan Supreme Court was sentenced on May 28, having been convicted of bank fraud. Defense lawyer Steven Fishman had requested leniency in an appearance before a federal court in Ann Arbor. Former justice Diane Hathaway pleaded guilty in January to making misleading statements to a bank during the short sale of her house in Gross Pointe, a wealthy suburb of Detroit. She was sentenced by U.S. District Court Judge John Corbett O’Meara to one year and one day in prison, followed by two years of supervised release.
Judge O’Meara appeared strained as he meted out the sentence to a fellow jurist after a long pause, and issued praise for both the prosecution and defense in the case. "This is hard," he said. "We're talking about a defendant that has accomplished a great deal in her lifetime and has done well and who I hope will be able to accomplish more... after all this is over.”
Appearing shaken, Hathaway addressed the court before receiving her sentence. The former jurist said she was ashamed and humiliated. "I stand before you a broken person," she said. "...I take full responsibility for my actions."
Writing to the court for Hathaway, defense attorney Fishman said “Her fall from the pinnacle of professional success has been swift, sudden, and tragic,” while he requested that she not be sent to prison. Hathaway, besides her work on the court, also held a real estate license. She retired on January 21 in the midst of scandal over accusations lain against her. Hathaway was elected to the high court in 2008 and was affiliated with the Democratic party.
“Given the defendant’s obvious knowledge of the law from serving approximately five years as a prosecutor and over 20 years on the bench, and her knowledge of real estate transactions as a licensed broker since the late 1980s, the defendant made a well-informed decision to commit bank fraud for her financial benefit,” Assistant U.S. Attorneys Daniel Lemisch and Patrick Hurford wrote in an earlier sentencing memorandum to the court. The prosecutors said that Hathaway’s “criminal activities occurred over the course of over two years and resulted in approximately $100,000 in losses to a federally insured financial institution.”
“This was not a crime resulting from a single decision or a momentary impulse,” wrote the prosecutors. “ This was a calculated crime that was committed over a significant period of time and involved the use of the defendant’s own stepchildren to aid in the concealment of assets.”
Hathaway pleaded guilty in January to one count of bank fraud after it was determined that she had moved the ownership of a property in Florida to relatives in order to qualify for a short sale of her home in Michigan. Banks normally allow short sales, which is to sell a house for less than the amount owed by a mortgagee, when property values fall. In this case, the Hathaway short sale eliminated nearly $600,000 in mortgage debt on her home in Grosse Pointe. Her home had been valued at $15 million, but eventually sold for $850,000. It was only afterwards that Hathaway’s house in Florida, which was debt-free, was restored to her name.
A plea deal for Hathaway would set her possible jail time at either 8 to 14 months or 12 to 18 months. The difference in the sentence was based on how much money the court decided was at stake in the venture. Hathaway agreed as part of her plea not to appeal punishment set by the court. Hathaway’s attorney believes she should go on probation instead of jail.
Hathaway will have to pay $90,000 in restitution to ING Bank, but will not have to forfeit her Florida home, under a deal struck with prosecutors.
Defense counsel Fishman argued that the potential loss for ING Bank was approximately $40,000, rather than the $90,000 claimed by prosecutors. Fishman argued that ING Bank received $150,000 more from the short sale scheme than if it had to sell Hathaway’s home through a sheriff’s foreclosure sale after she ceased to make mortgage payments.
As a potential presidential candidate, Walker says the GOP should stick with its convictions, but focus on what the voters want: economic issues.
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