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20
Jan

Michigan Supreme Court Justice Facing Federal Bank Fraud Charges in Addition to Short Sale Fraud Accusation

Michigan Supreme Court Justice Diane Hathaway, who is already the subject of a civil forfeiture complaint detailed in an earlier posting on the California Real Estate Fraud Report, has more troubles on her personal docket.

The U.S. District Court in Detroit filed a federal bank fraud charge this past Friday against Justice Hathaway, alleging she fraudulently transferred her debt-free Windermere, Florida home to her husband’s daughter using a quit claim in order to avoid having to declare the asset in a hardship letter to ING Direct, to which she had made an application to short sell her Grosse Pointe Park home in Michigan. Failing to fully disclose assets on an application is considered short sale fraud by lenders. By approving the short sale, Hathaway and her husband, Michael Kingsley, erased almost $600,000 in mortgage debt on their Michigan home and per the Mortgage Debt Relief Act, were also spared paying the Internal Revenue Service taxes on the personal gain.

Justice Hathaway’s hearing in federal court is January 29.

After the short sale, the Florida property was transferred back into their names.

Hathaway, who previously had refused to resign her position, decided to retire after the Michigan Judicial Tenure Commission, citing “blatant and brazen” misconduct, filed its own complaint against her and recommended suspension.

Sounding relieved, Michigan Supreme Court Chief Justice Robert Young Jr. said that Justice Hathaway’s retirement will “bring to a close an unhappy, uncharacteristic chapter in the life of this court.” In an interview with the Detroit Free Press, Chief Justice Young said “When any elected official is charged with serious misconduct, the public’s faith in its government institutions can suffer. This court, as an institution, will do what we have always strived to do: to uphold the highest ethical standards, render the best public service in promoting the rule of law for everyone, and do our utmost to deserve the trust the public has placed in us.”

In a unique and, in my opinion, transparent argument, Justice Hathaway’s attorneys have advanced the notion that she and Kingsley saved the bank money by keeping the house from falling into foreclosure. If such was the case, they certainly could have argued that viewpoint to their lender, ING, for its consideration and they certainly wouldn’t have felt the need to allegedly hide their other residential assets.

In the related civil case, U.S. Attorney Barbara McQuade is attempting forfeiture of Hathaway and Kingsley’s second home in Orlando (one of the ones she had allegedly concealed via quit claim). The home, valued at $664,000 in 2010, would compensate ING for the $600,000 in mortgage debt Hathway and Kingsley are alleged to have defrauded the lender.

Michael Kingsley was not named in the federal bank fraud charge, for which the maximum penalty is 30 years in prison.

Read the original article in the Detroit Free Press and the Huffington Post.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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