Former State Supreme Court Justice Sentenced for Short Sale Fraud

Diane M. Hathaway, 58, Grosse Pointe, Michigan, a former Michigan Supreme Court Justice, was sentenced to one year and one day in federal prison after having pleaded guilty in January 2013 to committing bank fraud in connection with a property in Grosse Pointe Park, Michigan.

At the time of the plea before United States District Judge John Corbett O’Meara, Hathaway admitted that between 2010 and 2011, she knowingly engaged in a scheme to defraud ING Direct bank.  Hathaway concealed assets from the bank to qualify for a short sale, thus obtaining a forgiveness of debt by the bank due to her claims of financial hardship.

Hathaway was also ordered to pay restitution in the amount of $90,000.

This case was investigated by the FBI, with assistance from Michigan Attorney General’s Office.

The government’s sentencing memorandum sought a 12 to 18 month sentence.

United States Attorney Barbara L. McQuade announced the sentence.  McQuade was joined in the announcement by Special Agent in Charge Robert D. Foley, III of the Federal Bureau of Investigation (FBI) and Michigan Attorney General Bill Schuette.

United States Attorney McQuade said, “We have made mortgage fraud a priority in this district because of the harm this crime causes to our housing markets in the aggregate. Homeowners who play by the rules should know that those who don’t will be held accountable, no matter who they are.”

Michigan Attorney General Schuette said, “Public corruption scandals have damaged the public’s trust in government and tarnished our state’s reputation. No matter who you are or what position you hold, the same rules apply. I supported U.S. Attorney Barbara McQuade’s request for prison time, and I appreciate her efforts, along with those of FBI Special Agent in Charge Bob Foley, to bring this case to a close.”

Robert Foley, Special Agent in Charge of the FBI said, “Regardless of a person’s stature or position in life, we must all follow the same set of rules. In this case, an individual in a prominent position of public trust made extremely poor choices that have resulted in criminal activity. The FBI is committed to stopping these illegal acts.”