Traverse City Record-Eagle

Archive: Tuesday

January 8, 2013

Lawyers: Michigan justice retiring amid investigation

DETROIT (AP) — Michigan Supreme Court Justice Diane Hathaway is quitting in two weeks, her lawyers said Monday, moments after a judicial watchdog sought her suspension for "blatant and brazen" violations of professional conduct while she tried to get rid of a suburban Detroit home in a short sale.

Hathaway's attorneys deny any misconduct. They blasted the Michigan Judicial Tenure Commission, saying a formal complaint was unnecessary because the agency's director was told that Hathaway had filed papers on Dec. 20 to retire on Jan. 21.

"The only reason they could possibly do this was to pander to the press," Brian Einhorn told The Associated Press. "Were they just trying to embarrass her?"

Hathaway's resignation means Republican Gov. Rick Snyder will appoint her successor and likely expand the court's conservative majority to 5-2.

Hathaway, a Democrat, has been under fire since last spring when Detroit TV station WXYZ reported a suspicious series of property deals. She and her husband put a debt-free Windermere, Fla., home in the name of a relative, then took ownership again after a short sale of another home in Grosse Pointe Park in 2011.

In a short sale, a bank agrees to a sale that wipes out any remaining mortgage. Hathaway and Michael Kingsley erased $600,000 in debt.

Federal prosecutors filed a lawsuit to try to seize the Florida home, claiming it was the fruit of bank fraud because it was not disclosed. Hathaway and Kingsley have denied any fraud and have not been charged with crimes. The lawsuit is pending.

Although the Judicial Tenure Commission's complaint could be moot with Hathaway's resignation, it offers new details about the real estate transactions and her dealings with ING Bank, which held the mortgage on the suburban Detroit home.

Hathaway and her attorney, Richard Linnell, told the bank in 2010 that she planned to retire in 2011, a disclosure intended to reinforce her financial hardship and improve the chance of getting a short sale approved, according to the complaint. Hathaway, of course, did not retire.

Hathaway told the commission that the Florida home was transferred to Kingsley's daughter for $10 in 2010 because Kingsley was being sued in an unrelated matter, according to the complaint.

The commission said Hathaway claimed a hardship but didn't disclose that she had provided $195,000 to a stepdaughter to purchase a home. In 2011, Sarah Kingsley deeded the house to Hathaway and Kingsley as their principle residence for less than $100.

Hathaway's actions add up to "blatant and brazen violations" of conduct required from judges, the commission said, accusing her of fraud, money laundering and misconduct in office.

The allegations against a "sitting justice of the Michigan Supreme Court are unprecedented in Michigan judicial disciplinary history. ... Public confidence in the judiciary is eroded by irresponsible or improper conduct by judges," the commission said.

A message seeking comment was left with commission director Paul Fischer.

At 58, Hathaway is halfway through an eight-year term on the Supreme Court and would have been eligible to run again in 2016. Hathaway mostly writes dissents to opinions written by Republican justices.

Einhorn said there "probably are 10 different reasons" for Hathaway's sudden retirement. She doesn't plan to participate in any court business, including oral arguments Wednesday, although she'll stick around for two more weeks.

"There's only so much people can take. This process could take six to eight months to wind itself through," Einhorn said, referring to a trial-like proceeding that could have ended with Hathaway's removal from office by her fellow justices. "Why put the court through it?"

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