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Michigan Supreme Court Justice Resigns After Accusation of “Blatant and Brazen” Ethics Violations

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by Publius
Posted January 08, 2013, 10:02 AM

The Detroit News reports:

Michigan Supreme Court Justice Diane Hathaway abruptly announced her retirement Monday hours after the state's judicial watchdog agency accused her of "blatant and brazen violations" of judicial ethics in a real estate scandal that has dogged her for months.

Hathaway has been under pressure to step down from the bench after federal prosecutors accused her of hiding a posh second home in Florida to dodge $600,000 in mortgage debt and unload a $1.5 million lakefront home in Grosse Pointe Park on a bank-approved short sale.

Elected in 2008 under the Democratic Party nomination, Hathaway's departure in the middle of an eight-year term allows Republican Gov. Rick Snyder to appoint a replacement to give the GOP a 5-2 majority on the high court until a 2014 special election.

The Michigan Judicial Tenure Commission on Monday took the unprecedented action of asking the Michigan Supreme Court to immediately suspend Hathaway and accused her of committing bank fraud, tax fraud, money laundering and lying to investigators about how she qualified for the short sale.

The commission's formal complaint against Hathaway is the first ever against a sitting Supreme Court justice. Supreme Court justices, who are elected statewide, typically only resign midterm for health reasons or to take another job, court history records show.

The panel's investigation concluded Hathaway and her husband, attorney Michael Kingsley, fraudulently hid assets and claimed to a bank in 2010 she was retiring — and would lose her $164,610 annual salary — to claim a financial hardship and escape $600,000 in mortgage debt owed to ING Direct on the home overlooking Lake St. Clair.

Meanwhile, the couple transferred two homes to Kingsley's children and Hathaway gave a third stepchild $195,000 cash to buy another home in Grosse Pointe Park they eventually moved into after unloading the Lake St. Clair home on the short sale, according to the commission's complaint.

U.S. Attorney Barbara McQuade has accused Hathaway and Kingsley of committing bank fraud by transferring the Windermere, Fla., home valued at $664,000 to Kingsley's daughter, Kathryn Sterr, during the short sale and getting the home back — with just $10 exchanging hands. The Judicial Tenure Commission investigators concluded the stepdaughter "never lived there."

Hathaway secretly filed paperwork Dec. 20 to retire Jan. 21 without informing fellow justices, and her attorneys only revealed her exit strategy Monday after the six-count complaint was filed. . . .

 

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