Supreme Court Chief Justice instructs Hathaway to explain property shuffle

LANSING (WXYZ) - In a statement issued by the Supreme Court’s Chief Justice Robert Young, he urged Justice Diane Hathaway to be forthcoming about real-estate transactions reported by 7 Action News.

"Ordinarily, the financial transactions of any person, including a Justice, are personal matters.  However, the WXYZ story raises very serious allegations about Justice Diane Hathaway's financial transactions. I am naturally very concerned about these allegations,” Young said.

“Because media allegations are just that and may fail to include a complete picture of a complex set of financial transactions, this morning I advised Justice Hathaway to respond publicly to these allegations to clear the air,” he said.

Young, a Republican, said he will have no further comment on Hathaway, a Democrat, or her financial transactions.

As we first reported last night, Hathaway avoided potentially hundreds of thousands of dollars in mortgage payments by convincing her bank to have a short sale. 

But she shuffled properties out of her name prior to the short sale: two homes were taken out of her name and put into her step children's: a 4,300 square foot home in a Windermere, Florida country club, complete with a private boat dock and pool, went to her step daughter, and a home on Windmill Pointe in Grosse Pointe Park  went out of Hathaway’s name, and into her stepson’s.

After the bank agreed to sell the house, the Florida property—valued at almost $740,000—went back into Justice Hathaway’s name. And a third home that was bought with cash months earlier in Hathaway’s other stepdaughter’s name was put into Justice Hathaway’s.  It’s not clear if Hathaway’s stepdaughter ever lived in that home, but Hathaway is living there now.

"It raises questions," said attorney Howard Young, who specializes in asset protection and estate planning.  He reviewed the timing of the property transfers, but we didn’t tell him they were Hathaway’s.  He says while it’s difficult to know why she did what she did, the timing seems unusual.

"It just sounds like, listen I’m going to park these assets in your name for a while, there’ll be deeds recorded, you’ll own them for all intents and purposes but our deal is, because you’re my child...when the trouble passes you’re going to transfer the property back to me."

Without an explanation from Hathaway, it’s hard to know why she shuffled her properties in and out of her name, and if it had something to do with her short sale.  Howard Young says when his clients have asked about moving assets out of their names to qualify for a short sale, he’s told them to be cautious. 

"Those are typically fraudulent transfers, because they are done with the intent to delay, hinder, or defraud creditors.  And we are very careful to advise against making such transfers because even as an attorney, you can well be considered a co-conspirator in a fraud and that has significant ethical issues, and the state bar is going to come looking," he said.