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US Attorney Sues Michigan Supreme Court Justice in Possible Short Sale Fraud Case

Hear Ye, Hear Ye, Prosecutors in California!

Finally the feds in other states are turning their prosecutorial sights on matters of short sale fraud.

The office of U.S. Attorney Barbara McQuade has filed a civil complaint against Michigan Supreme Court Justice Diane Hathaway and her husband attorney Michael Kingsley, alleging they deliberately concealed assets in order to obtain permission from their lender, ING Bank, to do a short sale of their home in Grosse Pointe Park.

The feds contend in their complaint that Hathaway and Kingsley transferred their home in Windermere, Florida to Kingsley’s daughter via quit claim before the short sale, along with a second home in Grosse Pointe Park. The allegedly couple did not list the Florida home as an asset before applying for the short sale with ING, which freed them of $600,000 in mortgage obligations without the penalty of paying personal gains per the Mortgage Debt Relief Act. As part of an application to do a short sale, borrowers are required to submit a hardship letter explaining why they are unable to pay their mortgage, enumerate their assets and liabilities and sign an affidavit affirming the truthfulness of their statements.

After the short sale was completed, Hathaway’s step-daughter transferred the homes back to her father and step-mother.

As part of their lawsuit, the U.S. Attorney’s Office for the Eastern District of Michigan is seeking the forfeiture of the Florida home. There is no word as to whether Michael Kingsley’s daughter will face any charges for her alleged participation in the scheme.

The complaint alleges that before submitting a Dec. 10, 2010, hardship letter to the bank in support of their request for a short sale, the couple “systematically and fraudulently transferred property and hid assets in order to support their claim to ING (Bank) that they did not have the financial resources to pay the mortgage on the Michigan property.”

The complaint says Hathaway and Kingsley quit claimed the Florida property to Kingsley’s daughter. The daughter then quit claimed the property back to them after the short sale.

According to the article in the Detroit Free Press, “Hiding assets to justify a short sale can be considered illegal because it is done to defraud the bank or financial institution that holds the mortgage on the property.”

Chief Justice Robert Young Jr. released this statement: “It is a dreadful development to have any sitting judge accused of fraud and money laundering. Justice Hathaway or her lawyer should clear the air and explain these transactions.”

Justice Diane Hathaway has said she will not resign her position.

You can learn why many people commit short sale fraud and fear no consequences of prosecution by reading my ebook “How to Commit Short Sale Fraud . . . and Get Away with It.”

© Copyright 2007-2018 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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