MI Supreme Court Justice Hathaway to retire after fraud accusation, commission's move to suspend her

LANSING (WXYZ) - Amid an accusation of fraud and a move by the state's Judicial Tenure Commission  to suspend her, it has been revealed that Michigan Supreme Court Justice Diane Hathaway will retire January 21.

Her attorney Steve Fishman confirmed the development to 7 Action News. He says Hathaway began the process of retiring back in December.

The Michigan Supreme Court released the following statement about Hathaway's retirement:

"This afternoon, through her counsel, Justice Hathaway advised the court that she is retiring effective January 21. In the meantime, she has agreed not to participate in any matters before the court."

Michigan Attorney General Bill Schuette also released a statement on Hathaway's retirement:

“Given the gravity of ongoing federal allegations and today’s unprecedented Judicial Tenure Commission complaint, it is in the people’s best interest that Justice Hathaway step down from the bench.  Too many public corruption scandals have damaged the public’s trust in government and tarnished our state’s reputation. 

“I expect Governor Snyder will move quickly to appoint a successor, and that the work of our state’s highest court will soon move forward without further hindrances.”

The revelation of Hathaway's retirement comes not long after she was hit with the formal complaint by the state's Judicial Tenure Commission, which asked that she be suspended from the bench. 

The JTC complaint accuses Hathaway of fraud and money laundering and comes on the heels of a November civil complaint filed by the U.S. Attorney, which also accused Hathaway of fraud. 

The feds began forfeiture proceedings to go after Hathaway's $750,000 Florida home, which they alleged she hid in a stepdaughter's name in order to have a short sale approved on her Grosse Pointe Park home. Last month, they put a stay on those forfeiture proceedings.

The JTC has asked that Hathaway be suspended pending the resolution of their formal proceedings. Hathaway has 14 days to respond to the JTC's complaint. 

A short sale allows a homeowner to sell his or her property at a loss rather than go into a foreclosure. It can save the owner hundreds of thousands of dollars in mortgage payments, but he or she needs to prove a hardship to their bank, like a loss in income.

But prior to Hathaway’s short sale, she shuffled two homes out of her name: a Florida home valued at almost three-quarters of a million dollars went to her stepdaughter, and one in Grosse Pointe Park went to her stepson.

After the bank agreed to the short sale on Hathaway’s Lake St. Clair home, that Florida house went back into Hathaway’s name.

The home where the Justice currently lives was recently put into her name, but its first owner was Hathaway’s stepdaughter.  According to records, she bought it for $195,000 cash around the same time Hathaway’s bank was mulling over the short sale that they ultimately approved.  Hathaway won’t say whose cash was used to buy that home,