Michigan Supreme Court Justice Diane Hathaway has resigned amid allegations of bank fraud.
Hathaway told the court last month that she planned to step down effective on January 21, according to her attorney. Her decision became public on January 7, the same day the Michigan Judicial Tenure Commission filed a complaint asserting that she had committed numerous judicial conduct violations related to the sale of her house.
The commission’s complaint followed a civil lawsuit filed in November by U.S. Attorney Barbara McQuade in Detroit alleging that Hathaway had committed mortgage fraud by hiding assets.
That civil lawsuit asserts that Hathaway and her husband temporarily transferred a home they owned in Florida to their daughter before seeking forgiveness, or a short sale, from their mortgage lender on another home near Detroit. The couple reportedly bought the Detroit house for $1.5 million, sold it for about $850,000 and sought loan forgiveness on the loss.
The lawsuit, which seeks forfeiture of the Florida property, alleges that Hathaway and her husband “systematically and fraudulently transferred property and hid assets in order to support their claim … that they did not have the financial resources to pay the mortgage on the Michigan property.”
The Judicial Tenure Commission’s complaint calls for Hathaway’s immediate suspension. It alleges violations of federal and state anti-fraud laws and judicial ethics rules, including failure to respect and observe the law and failure to adopt a conduct and manner that promotes public confidence in the integrity of the judiciary.
Responding to Hathaway’s decision to resign, a Michigan Supreme Court spokeswoman sent a formal statement via email.
“Yesterday afternoon, the Supreme Court was advised by Justice Hathaway’s counsel that she will retire effective January 21. In the interim, she has agreed not to participate in any matters before the Court, including this week’s oral arguments.”
Hathaway’s attorney, Brian Einhorn, said that once Hathaway resigns, the judicial commission would lose jurisdiction to pursue its action. He said his client has answered the U.S. attorney’s complaint, and that the case has been stayed for 90 days pending her resignation.
Republican Governor Rick Snyder is expected to appoint a replacement for Hathaway, a Democrat who was elected to an eight-year term in 2008. His selection could change the court’s conservative majority from 4-3 to 5-2. An election for the seat’s eight-year term would occur in 2016.
Einhorn said he expects Hathaway to enter private practice. “She’ll be out of the public eye and be able to live her life without being badgered,” he said.
Contact Leigh Jones at firstname.lastname@example.org.