Diane Hathaway with President Obama

Last Friday, the US Attorney filed federal criminal charges [bank fraud] against the now-former Michigan Supreme Court Justice Diane Hathaway; her last official day was Monday, although she has been absent from the bench for weeks.  This is yet another case that gives the public pause, and erodes the confidence we place in our publicly elected officials; especially jurists; especially those elected to the Michigan Supreme Court.


By now, this story is well-known.  Ms. Hathaway and her husband are alleged to have concealed an intra-family transfer of a parcel of Florida real estate in order to get a short-sale approved which resulted in a mortgage loan forgiveness of more than $600,000.

The feds assert that the intra-family transfer was not disclosed to the mortgage lender to intentionally trick the lender into believing the Hathaways were suffering an economic hardship.  Once the short sale was approved, the Florida property was transferred back to the Hathaways.

Seems like a slam dunk prosecution.  Because the federal charging instrument filed in the case was an "information", a guilty plea is expected to be tendered by Hathaway next Tuesday in U.S. District Court.

We here at the Law Blogger have seen many of our divorce clients, while suffering genuine intense economic hardship, have their short sale offers or their loan modification applications rejected.  But even the notion of a sitting Supreme Court Justice applying for a short sale strikes us as untenable.  This whole story falls squarely within the category of: "What were they thinking?"

Thinking back to the November elections of 2008, when Hathaway was elevated from the Wayne County Circuit Court to the High Court, this blog recalls all those attack ads about former Justice Cliff Taylor depicted [via cleaver video editing we might ad] falling asleep during oral arguments.  In the long-run, however, any faith Michiganders placed in Hathaway to replace the pro-insurance Taylor was squandered.

At Hathaway's inevitable sentencing, she will be ordered to pay back the mortgage deficiency.  But we have to wonder: will she also be sentenced to federal prison?  Perhaps she will be able to avoid a prison sentence by tendering a guilty plea.  Wow, a former Michigan Supreme Court Justice pleading guilty in a federal courthouse.

One of the consequences of Hathaway's resignation from the High Court is the imminent appointment of a replacement.  One name that has been floated is Oakland County Circuit Judge Colleen O'Brien.  And if she gets the appointment, Governor Snyder will also have the opportunity to appoint O'Brien's replacement to the Oakland Circuit.

We can hardly wait.  Stay tuned.

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