RETIRED MICHIGAN SUPREME COURT JUSTICE PLEADS GUILTY TO BANK FRAUD AND AWAITS SENTENCING

FORMER MICHIGAN SUPREME COURT JUSTICE DIANE HATHAWAY

Retired Michigan Supreme Court Justice Diane Hathaway pleaded guilty to felony bank fraud Tuesday and is expected to be sentenced on May 28.

Hathaway stood quietly at a podium in U.S District Court in Ann Arbor this morning, acknowledging she intentionally defrauded a federally-insured financial institution hen she short-sold her Grosse Pointe Park home.

According to an agreement negotiated with the U.S. District Attorney's Office, her punishment is limited to up to 18 months behind bars or could be as little as 4-10 months if a pre-sentence report determines there was no actual financial loss.

"Yes your honor, I agree," Hathaway said to Eastern District Court Judge John Corbett O'Meara.

Hathaway's only "no" response came when O'Meara asked her about using her position as a Michigan Supreme Court judge as part of the scheme.

"Did you use your status as a public employee in your attempt to defraud?" O'Meara asked her.

"No," she responded.

Also during the hearing, prosecutors acknowledged there is insufficient evidence to charge others who may have been involved in the scheme, and agreed to limit proceedings to Hathaway only.

Hathaway retired Jan. 21 amidst the scandal involving the short sale.

Hathaway was charged Jan. 18 with one count of bank fraud after investigators said she moved ownership of property in Florida to relatives so she could qualify for the short sale. Hathaway allegedly told financial institution ING Direct she could no longer afford the house payments on the Michigan home.

In a civil filing in November, the U.S. Justice Department accused Hathaway and her husband, attorney Michael Kingsley, of fraudulently concealing their net worth.

The short sale in Michigan allowed the couple to erase nearly $600,000 in mortgage debt on the $1.5-million Grosse Pointe Park home on Lakeview Court, which eventually sold for $850,000. The debt-free Windermere, Fla., home then went back into their names.

Hathaway left the bench after announcing the decision to retire Jan. 7 after the Judicial Tenure Commission filed a complaint and sought her immediate suspension. The commission alleged she committed "blatant and brazen" misconduct violations in connection with private real estate transactions.

Republican Gov. Rick Snyder has yet to name her replacement.