White-Collar Crime

Former state supreme court justice gets one year in bank fraud case

A now-retired Michigan supreme court justice was sentenced Tuesday to a year and a day in federal prison after pleading guilty to a felony bank fraud charge earlier this year.

Prosecutors in the Ann Arbor case had sought a year to 18 months for Diane Marie Hathaway, 59, who reportedly transferred ownership of a Florida home to relatives so she could qualify for a short sale in Michigan that erased nearly $600,000 in mortgage debt on her Detroit-area home, the Lansing State Journal reports.

Then, after the short sale went through and the $1.5 million Grosse Pointe Park home sold for $850,000, the debt-free Florida home went back into Hathaway’s name, the newspaper reports.

Hathaway’s lawyer, Steven Fishman, had sought probation. “Her fall from the pinnacle of professional success has been swift, sudden, and tragic,” he said of his client in a sentencing memo earlier this month.

Additionally, Hathaway must repay $90,000 and serve two years of probation. Fishman argued that the actual amount lost by the bank was only about $40,000. He said Hathaway would have qualified for the short sale regardless, but the fraud reduced the amount she had to bring to the closing table at the completion of the transaction.

Hathaway spoke in a shaky voice before sentencing, calling herself “a broken person” and saying that she took full responsibility for her actions, MLive.com reports. “I am ashamed, embarrassed, humiliated and disgraced,” she told U.S. District John Corbett O’Meara.

The Associated Press said she was crying as she spoke.

O’Meara appeared to find the sentencing painful. He called Hathaway “a defendant that has accomplished a great deal in her lifetime and has done well and who I hope will be able to accomplish more … after all this is over.”

See also:

ABAJournal.com: “Former state supreme court justice takes plea in bank fraud case”

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