Diane Hathaway

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This week in Michigan politics, Emily Fox and Jack Lessenberry discuss the sentencing of former Michigan Supreme Court Justice Diane Hathaway, former Congressman’s Mark Schauer’s run for governor, and a proposed funding increase for education in the state budget this year.

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Former Michigan Supreme Court Justice sentenced to jail time

“Former Michigan Supreme Court Justice Diane Hathaway was sentenced to one year and one day in federal custody, for the crime of bank fraud. Federal prosecutors say Diane Hathaway illegally concealed a million dollars in assets, so she could qualify for favorable terms on a short sale of one of her homes in Michigan. The defendant had hoped to avoid prison time,” Michigan Radio's Vincent Duffy reports.

Michigan schools could see increase in state funding

“Michigan public schools would see more state funding under a budget plan approved by the state House. Every school would see at least a five-dollar per-pupil boost. Schools getting the minimum amount from the state could receive up to 60 dollars more per student. The state Senate is expected to take up the education budget today,” Michigan Radio’s Jake Neher reports.

Strong winds and funnel clouds cause damage in Michigan

"The National Weather Service reported several funnel cloud sightings in Michigan last night, including a tornado that landed near Goodrich High School southeast of Flint. No injuries were immediately reported. The weather service says high winds in the same severe thunderstorm system heavily damaged several homes, toppling numerous trees and power lines," the Associated Press reports.

There are many ideas and strategies being talked about for how to keep young people in Michigan. On today's show:  we spoke with one young writer who says it's simply not enough.

And we heard about how refugees, having survived physical and psychological traumas in their home countries, are getting mental health services here in Michigan.

Also, Rick Pluta gave us an update on ex-Justice Diane Hathaway, who was sentenced for fraud in federal court today in Ann Arbor.

Mark Brush / Michigan Radio

Former Michigan Supreme Court Justice Diane Hathaway was sentenced for bank fraud in federal court today in Ann Arbor.

Hathaway was forced to resign in January, halfway through her eight-year term on the state Supreme Court.

She resigned before pleading guilty to a scheme to cheat a bank by hiding assets including a vacation home in Florida.

That helped her qualify as a distressed homeowner, so she could then sell a lakefront home in Grosse Pointe Park as a short-sale.

Rick Pluta, Lansing Bureau Chief for the Michigan Public Radio Network, has been covering this story for us, and he joined us today in the studio.

Listen to the full interview above.

Mark Brush / Michigan Radio

Former Michigan Supreme Court Justice Diane Hathaway was sentenced to 12 months and one day in prison by U.S. District Judge John Corbett O'Meara today in federal court. She was also ordered to pay $90,000 in restitution to ING bank. 

She will also serve two years supervised release after she gets out of prison.

Her attorney Steven Fishman says Hathaway will pay the fine today.

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State Supreme Court Justice faces sentencing

Former Michigan Supreme Court Justice Diane Hathaway is due in court today to be sentenced for fraud. Hathaway was forced to resign in January when she pleaded guilty to a scheme to cheat the bank by hiding assets.  Hathaway’s attorney is asking that she be allowed to perform community service and pay thousands of dollars in fines; however, federal prosecutors have asked for prison time of 12 to 18 months. Michigan Radio's Rick Pluta has more.

Benton Harbor EM believes deficit will be eliminated in one year

Tony Saunders, the emergency manager of Benton Harbor, says elected leaders are likely to regain control within a year when the city's structural deficit will be eliminated. Michigan Radio’s Lindsey Smith reports Benton Harbor’s new emergency manager says he’s cut more than a million dollars from the budget in just three months.

Senator Debbie Stabenow's farm bill is headed to the senate

Senator Debbie Stabenow will rally in West Michigan this week. She's trying to get farmers to pressure lawmakers to pass her new farm bill to funds crop insurance programs and research to help fight invasive insects. Last year the Senate passed the farm bill but it died in the House. The Senate is expected to vote on the farm bill early next month.

michigan.gov

Former Michigan Supreme Court Justice Diane Hathaway finds out tomorrow whether she’s headed to prison for bank fraud.

Hathaway pleaded guilty in federal court to concealing a vacation home in Florida, and other assets, to engineer the short sale of a lakefront property in Grosse Pointe Park.

She also resigned the state Supreme Court seat she won in the 2008 election. 

Yesterday, Governor Rick Snyder finally filled the vacancy on the Michigan Supreme Court created when disgraced Justice Diane Hathaway resigned last month, just before pleading guilty to felony bank fraud. His pick was a mild surprise; David Viviano, the young chief circuit judge in Macomb County.

Later that afternoon, I was pleasantly surprised that the governor called me to explain the process by which he made this appointment. I suspect this was because I have talked and written a lot about the Michigan Supreme Court, which didn’t have the highest reputation, even before the Hathaway scandal.

Well, it’s now official: A person who ten days ago was a Michigan Supreme Court justice is now a convicted felon.

Diane Hathaway pleaded guilty yesterday in federal court to a single count of bank fraud. While on the bench of Michigan’s highest court,she temporarily transferred three of four expensive houses she and her husband owned to her stepchildren.

She did this, the federal prosecutor and the FBI said, as part of an elaborate scheme to hide assets from the bank. This was done in order to make it look like she and her husband, attorney Michael Kingsley, were suffering financial hardship.

They wanted to look worse off than they were because they wanted to convince her bank to allow her to sell yet another home they owned in Grosse Pointe Park in what’s called a short sale.

michigan.gov

Update 11:30 a.m.

Former Michigan Supreme Court Justice Diane Hathaway stood in front of federal judge this morning and plead guilty to felony bank fraud charges. More from the Detroit Free Press:

Hathaway stood quietly at a podium in U.S District Court in Ann Arbor this morning, acknowledging she intentionally defrauded a federally-insured financial institution when she short-sold her Grosse Pointe Park home.

According to an agreement negotiated with the U.S. District Attorney’s Office, her punishment is limited to up to 18 months behind bars or could be as little as 4-10 months if a pre-sentence report determines there was no actual financial loss.

“Yes your honor, I agree,” Hathaway said to Eastern District Court Judge John Corbett O’Meara.

She is scheduled to be sentenced in May. The Detroit News reports that Hathaway's attorney, Steve Fishman, is likely to argue that her actions did not harm the bank:

Fishman has previously said Hathaway and her husband, attorney Michael Kingsley, saved the bank $150,000 by negotiating a short sale of their home rather then letting it be sold at a foreclosure auction.

But prosecutors have tripped up Hathaway on a fraud charge because she and Kingsley transferred a posh second home in Windermere, Fla., valued at $664,000, to one of Kingsley's daughters while applying for the short sale — and then got the house back after selling the Grosse Pointe Park home.

During the short sale process, in 2010 and 2011, Hathaway also acquired two other homes in Grosse Pointe Park on Windmill Pointe and Balfour Street and transferred them to her stepchildren. Hathaway's stepdaughter, Sarah Kingsley, transferred the Balfour Street back to Hathaway after the short sale of the home on Lakeview Court, public records show.

U.S. Attorney Barbara McQuade plans to hold a press conference this afternoon to talk about the Hathaway case.

10:45 a.m.

Former Michigan Supreme Court Justice Diane Hathaway is due in federal court today for an anticipated guilty plea to bank fraud. More from the Associated Press:

Hathaway is accused of concealing assets while trying to persuade a bank that she needed a short sale. That was to get rid of a Grosse Pointe Park home that carried a big mortgage.

Her hearing is set for today in Ann Arbor federal court.

Hathaway was charged Jan. 18, three days before she left the Supreme Court because of the scandal.

She and her husband transferred a debt-free Florida home to a relative before the 2011 sale of their Detroit-area home. After the short sale went through, the Florida property went back in their names.

Hathaway was elected to the Supreme Court in 2008.

This “week in review”, Michigan Radio’s Weekend Edition host Rina Miller and political analyst Jack Lessenberry discuss proposed gun laws in Michigan, who might replace former Supreme Court Justice Diane Hathaway, and the new hiring rules for emergency financial managers in the state.

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Michigan Attorney General questions Hathaway's fitness as a lawyer

Michigan Attorney General Bill Schuette asked the Attorney Grievance Commission to investigate former Supreme Court Justice Diane Hathaway’s “fitness to practice law.” As the Detroit Free Press reports,

"Schuette requested the investigation as Hathaway, who officially retired Monday amid an ethics scandal, awaits a Tuesday appearance in federal court in Ann Arbor on a felony charge of bank fraud. She is expected to plead guilty. The federal charge relates to property transfers Hathaway made while seeking a short sale on a home in Grosse Pointe Park. But Schuette said in his letter to Attorney Grievance Commission administrator  that the allegations against Hathaway raise questions about her fitness to hold a law license, not just to be a judge."

Obama administration to address Detroit's abandoned buildings

"US Secretary of the Interior Ken Salazar, Senator Carl Levin and Michigan officials will host a meeting in Detroit today to talk about how tax breaks for historic preservation projects can help distressed cities. In a statement, Secretary Salazar says the Federal Historic Preservation Tax Incentives program has been used for 70 projects in Detroit since 2000. He says he wants to talk about how that program can help revitalize the city," Sarah Hulett reports.

Detroit Public Schools expect more cuts

"The Detroit Public Schools plans to shrink even more to wipe out its deficit by 2016. The district’s latest deficit elimination plan projects that enrollment will dip below 40,000 students. In order to 'stay ahead of the cost curve,' emergency financial manager Roy Roberts proposes some drastic cuts—including closing as many as 28 more schools," Sarah Cwiek reports.

Former justice Diane Hathaway will face bank fraud charge next week

Jan 23, 2013
michigan.gov

Former Michigan Supreme Court Justice Diane Hathaway will face a federal bank fraud charge in a United States District Court in Ann Arbor next Tuesday.

The charge was filed as criminal “information,” meaning Hathaway has negotiated with prosecutors and is likely to plead guilty, the Detroit News reports.

cncphotos / flickr

In this week in Michigan politics, Jack Lessenberry and Christina Shockley discuss the likelihood of Michigan having a part time legislature, what will happen to former Supreme Court Justice Diane Hathaway and who is likely to replace her. Lessenberry and Shockley also talk about the 26-year-old who will soon be the emergency manager for Benton Harbor.

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Survey: It should be tougher to become a teacher

"It should be a lot tougher to become a teacher in this state. At least that's what the Center for Michigan found in a statewide survey of some 7,500 people. Eighty percent of educators polled say Michigan needs better teacher preparation," Kate Wells reports.

Governor Snyder wants state to put more money in early childhood education

Governor Rick Snyder wants the legislature to support more funding for early childhood education. As the Detroit News reports,

"Gov. Rick Snyder said Tuesday he will ask the Legislature to undertake a "significant phase-in" of 29,000 4-year-olds into public preschool programs over the next few years, an annual investment of $130 million. The state can't afford to add all 29,000 children eligible for the Great Start Readiness Program at once, Snyder said, so he intends to propose ramping up enrollment over a period of years to ease the impact on the budget."

Former Michigan Supreme Court justice Hathaway expected to plead guilty

Former Michigan Supreme Court Justice Diane Hathaway will be in court next week. She resigned from the high court on Monday.  As the Detroit News reports,

"Former Michigan Supreme Court Justice Diane Hathaway will find herself on the other side of the bench on Tuesday when she's likely to plead guilty to bank fraud charges related to questionable real estate transactions, legal experts say."

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Critics of Governor Snyder's roads funding say weight limit an issue

Critics of Governor Rick Snyder's proposal to spend more than a billion dollars to fix Michigan's roads say the state should change it's weight limit on roads. Michigan has the highest weight limit on roads in the nation. As the Detroit Free Press reports,

"They say if Michigan brought its weight restrictions more into line with other states, its roads and bridges would last longer. State officials acknowledge Michigan's maximum truck weight of 164,000 pounds -- just more than twice the federal weight limit."

Hathaway resignation could give Supreme Court a Republican 5-2 majority

State Supreme Court Justice Diane Hathaway officially resigned yesterday. As Kate Wells reports, "She's facing federal charges for bank fraud. But it's not just the political scandal: Hathaway was nominated to the bench by a Democratic governor. Now, Republican Governor Rick Snyder gets to choose her replacement. That could bring the court's tally to five Republican judges and just two Democrats."

McDonalds to pay fine to a Detroit-area restaurant over claim on Muslim dietary law

"McDonald's and one of its franchise owners have agreed to pay $700,000 dollars to members of the Muslim community. That's in an effort to settle allegations a Detroit-area restaurant falsely advertised its food as being prepared according to Islamic dietary laws. A spokesman says there's no evidence McDonald's set out to deceive customers," the Associated Press reports.

michigan.gov

As Justice Diane Hathaway officially resigns from the Michigan Supreme Court today, Governor Rick Snyder says he is considering her replacement.

Hathaway’s resignation comes after federal prosecutors charged the justice with bank fraud in connection with a 2011 real estate deal.

The Michigan Supreme Court opens its 2012 session this week.
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This week in Michigan politics, Michigan Radio’s Morning Edition host, Christina Shockley and Michigan Radio’s political analyst, Jack Lessenberry discuss the resignation of Michigan Supreme Court Justice Diane Hathaway and the firing of Detroit’s top lawyer.

Justice Hathaway resigned this week. This comes after a disciplinary panel filed an ethics complaint against her. The complaint accuses Hathaway of cheating and lying about a real estate transaction that saved her $600,000.

Lessenberry says, “It’s another black eye to the Michigan Supreme Court which has been rated the least respected of all Supreme Courts in the Nation by the University of Chicago by a law school study there.”

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Michigan Supreme Court Justice Diane Hathaway will resign January 21.

The news came after the state’s Judicial Tenure Commission unveiled a 19-page complaint accusing her of money laundering, fraud and tax evasion.

“It is an event that has never happened and I think is of very great consequence,” said Larry Dubin of University of Detroit Mercy Law School.

“There is an adversarial relationship between the Judicial Tenure Commission and judges they eventually go after.”

A young reporter once asked me how you could tell if a someone was really retiring of their own free will, or being fired. “Well,” I said, “When someone prominent retires, they often announce it well in advance, and they honor them with a dinner. When someone suddenly leaves at ten in the morning on Tuesday, allegedly to spend more time with their family, they’ve been fired.” 

Yesterday, we learned that Michigan Supreme Court Justice Diane Hathaway is “retiring” from the court, barely halfway through her first term. Her retirement was announced right after the Judicial Tenure Commission lodged a formal complaint against her.

That complaint is perhaps the most damning against a sitting judge I’ve ever seen. It claims she violated federal and state laws against fraud, federal money laundering and tax laws, and constitute “conduct that is contrary to justice, ethics, honesty, or good morals.”

None of this comes as much of a surprise. Last spring, WXYZ-TV in Detroit first reported irregularities in the sale of a house she and her husband owned in Grosse Pointe Park.

Two months ago, federal authorities then sued Hathaway and her husband, who is also a lawyer, and have attempted to seize a home they own in Florida for fraudulently hiding real estate they owned in order to get a bank to write off a large mortgage.

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Supreme Court Justice Hathaway resigns

"Michigan Supreme Court Justice Diane Hathaway announced Monday she will retire from the bench Jan. 21 after the Judicial Tenure Commission filed a formal complaint calling for her immediate suspension from the bench for alleged “blatant and brazen violations” of judicial conduct rules the commission said were “unprecedented in Michigan judicial disciplinary history.” Among the charges in the complaint is that Hathaway submitted false answers to the Judicial Tenure Commission during its recent investigation of private real estate transactions by Hathaway which are the subject of an FBI investigation," the Lansing State Journal reports.

Electric cars required to make more noise

The federal government is planning to issue new rules regulating car noise for electric vehicles. Electric and hybrid cars are sometimes too quiet. That could increase pedestrian and vehicle accidents, especially when it comes to visually impaired pedestrians. The National Highway Traffic Safety Administration wants all electric and hybrid vehicles to make some noise when traveling under 18 miles per hour to deal with the problem, Tracy Samilton reports.

Child welfare workers protected under new Michigan law

"A new law signed by Secretary of State Ruth Johnson gives private child welfare agencies and their workers in Michigan extra protection from lawsuits if they're under contract with the state. They'll be immune from liability for personal injuries or property damages unless their conduct amounts to 'gross negligence or willful misconduct,'" the Associated Press reports.

michigan.gov

Michigan Supreme Court Justice Diane Hathaway has resigned.

That news became public just hours after an ethics complaint was filed against her, along with an unprecedented request that she be suspended from the court.

The state Supreme Court had never been asked to take this kind of disciplinary action against a sitting justice.

Before the court acted on her suspension, Justice Hathaway’s attorney said she had already agreed to resign and won’t participate in any more cases. Hathaway’s resignation becomes official on January 21st.

The complaint accuses her of fraud and money laundering in a real estate deal, as well as lying about it to the Judicial Tenure Commission.        

Hathaway still faces a federal lawsuit that seeks to seize her Florida vacation home.         

Hathaway is a Democrat elected to the court in 2008. It will be up to Republican Governor Rick Snyder to name a replacement.

Update 4:26 p.m.

A lawyer says embattled Michigan Supreme Court Justice Diane Hathaway will retire on Jan. 21.

Steve Fishman tells The Associated Press that Hathaway filed the paperwork on Dec. 20. He made the disclosure Monday after a judicial watchdog agency filed a complaint and asked the Supreme Court to suspend Hathaway over a series of suspicious real estate transactions.

Fishman says the Judicial Tenure Commission was told about Hathaway's retirement in December. He says the filing of the 19-page complaint was a "gratuitous" move.

The commission says Hathaway committed "blatant and brazen" violations of professional conduct in the 2011 short sale of her home in Grosse Pointe Park. Hathaway and her husband put a debt-free Florida home in a relative's name, but regained the property when the Michigan sale was completed.

2:48 p.m.

The Michigan Supreme Court will be asked for the first time to suspend a sitting justice for misconduct.

The Michigan Judicial Tenure Commission has filed a formal complaint against Justice Diane Hathaway. The disciplinary board has also asked the court to suspend Hathaway while the proceedings play out.

She has 14 days to respond to the complaint. Hathaway is accused of ethics violations for allegedly using property swaps to arrange a short sale that saved the couple hundreds of thousands of dollars -- a loss that was swallowed by the bank. The U.S. Attorney in Detroit has also filed a lawsuit against Hathaway.

michigan.gov

A story broke yesterday that Michigan Supreme Court Justice Diane Hathaway had cleared out her office at the Hall of Justice. 

Many took this as a sign that Justice Hathaway was preparing to resign from the court amid an FBI investigation into her real-estate dealings.

But Hathaway denied the claims that her office had be cleared or that she was planning to resign.

Let’s start by saying something we should never forget: In America, anyone accused of a crime is innocent until proven guilty.

Michigan Supreme Court Justice Diane Hathaway hasn’t even been accused of a criminal offense. But in a development that has been expected for months, U.S. District Attorney Barbara McQuade has filed civil charges accusing the justice and her husband of real estate fraud. The complaint alleges that they, quote “systematically and fraudulently transferred property and hid assets.”

What happened, according to the feds, was this: Two years ago, the Hathaways wanted to arrange a so-called short sale of a home they owned in the Detroit area. In other words, they wanted to sell the house for less than they owed on their mortgage. 

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Feds accuse Supreme Court Justice of fraud

"Michigan Supreme Court Justice Diane Hathaway faces a federal civil lawsuit. It accuses Hathaway and her husband of hiding assets to qualify for a short sale on a $1.5 million home. Hathaway and her attorney have also tried to tamp down rumors that she is about to resign from the state’s highest court. Sources inside the Michigan Hall of Justice say Hathaway has cleared out her personal belongings from the state Supreme Court offices in Lansing. Hathaway sent an e-mail to her fellow justices saying she is not stepping down," Rick Pluta reports.

U of M doctor involved in insider trading scheme

"A University of Michigan doctor is at the center of what's possibly the most lucrative insider trading scheme ever. Sidney Gilman is an Alzheimer's expert. He's also a paid consultant for a hedge fund investing in Alzheimer's drugs. The Department of Justice alleges Gilman gave the hedge fund secret information: namely, that a major drug test by the company Elan was getting bad results. At a press conference, the F-B-I's April Brooks says Gilman and the hedge fund investor, knew sharing that information was illegal," Kate Wells reports.

Bill would allow a 12-week-old fetus to be claimed as dependent

State lawmakers are considering legislation that would let parents claim a fetus as a dependent on their tax returns. As Mlive reports,

"Michigan lawmakers may consider allowing a fetus of at least 12 weeks to qualify as a dependent for state income tax purposes -- a move that if put into law might be the first of its kind in the nation. . . A representative of the Michigan Family Forum, which supports the bill, said it could translate to a $160 savings that could be used for prenatal care or other purposes. But critics called the measure divisive and said it appeared to be a move to lay the groundwork to fight against abortions."

michigan.gov

Wednesday, November 21st, 12:38 p.m.

We began a new post on this story here. Here's an update from the Associated Press:

The lawyer for a Michigan Supreme Court justice accused of fraud says she'll file a claim to keep a Florida home out of the hands of the government.

Steve Fishman offered brief comments Wednesday, two days after prosecutors sued to take control of a house owned by Justice Diane Hathaway and husband Michael Kingsley.

The government says they temporarily transferred the home to a relative while trying to negotiate a short sale on a Michigan property. After the sale went through, and mortgage debt was erased, the Florida home went back to Hathaway and Kingsley.

The government says ING  Bank was cheated.

Fishman declined to respond to the fraud allegation but says Hathaway and Kingsley will fight to keep the property in Windermere, Fla.

No criminal charges have been filed.

Tuesday, November 20th 6:16 p.m.

The U.S. Attorney has filed a civil complaint against Supreme Court Justice Diane Hathaway and her husband, accusing them of fraud in a series of real estate transactions that allowed them to broker a short sale. The complaint seeks the forfeiture of the couple's of the couple’s $750,000 Florida home.

3:17 p.m.

MPRN's Rick Pluta spoke with Michigan Radio's Cynthia Canty about his report that Michigan Supreme Court Justice Diane Hathaway has cleaned out of her office. Hathaway has denied the report.

"Clearly the easiest way to settle the question once and for all would be to look in the office.... I was told I would have to get permission from Justice Hathaway.... I called her office and was told simply 'your questions have been answered,'" said Pluta.

You can listen to Pluta's conversation with Canty below.

2:00 p.m.

This message was sent by Marcia M. McBrien, Public Information Officer at the Michigan Supreme Court: 

Please be advised that Justice Hathaway has sent the other justices and Court staff an e-mail stating that the rumors that she is going to resign are NOT true.

12:40 p.m.

Michigan Supreme Court Justice Diane Hathaway and her attorney say it's not true that she is about to resign, or that she has cleared out her Lansing office.

"She is not resigning. Period," says criminal attorney Steve Fishman, who represents Hathaway as she is investigated over real estate transactions. "Rumors of her resignation are greatly exaggerated."

Hathaway also sent an e-mail to Michigan Supreme Court employees saying she is not resigning.

Fishman and a woman identifying herself as Hathaway's senior law clerk says a junior law clerk moved out of Hathaway's office at the Michigan Hall of Justice last week.

11:32 a.m.

A source inside the state Hall of Justice confirms that Justice Diane Hathaway has cleaned out her Lansing office and the locker where she keeps her robe at the Michigan Supreme Court.

Hathaway is reportedly under investigation by the FBI over real estates transactions. She has not communicated officially with the state Supreme Court whether she intends to resign.

*Clarification - We updated our headline to reflect the new information we've learned from the court.