Former Supreme Court Justice Admits Short Sale Fraud

Allison Tussey —  January 30, 2013 — Leave a comment

Diane M. Hathaway, 58, Grosse Pointe, Michigan, a former Michigan Supreme Court Justice, pleaded guilty to committing bank fraud in connection with a property owned at 15834 Lakeview Court, Grosse Pointe Park, Michigan.

According to the criminal information and testimony presented during a hearing 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 by concealing assets from the bank to qualify for a short sale. A short sale is a forgiveness of debt by the bank to a borrower who claims financial hardship.

Based on her guilty plea and felony conviction for committing bank fraud, Hathaway is facing a maximum of 30 years in prison, a fine of up to $1,000,000, and up to five years of supervised release.

United States Attorney Barbara L. McQuade announced the guilty plea. 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.

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

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.”

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.”

Michigan Attorney General Bill Schuette said, “Public corruption scandals have damaged the public’s trust in government and tarnished our state’s reputation. But today, we begin to move forward, beyond the cloud of controversy that hung over our state’s Supreme Court. I appreciate the hard work of U.S. Attorney Barbara McQuade and FBI Special Agent in Charge Bob Foley, who brought this case to a swift and just end.”

Allison Tussey

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