U.S. Attorney accuses Michigan Supreme Court Justice Diane Hathaway of fraud over short sale

(WXYZ) - The U.S. Attorney has filed a civil complaint accusing Michigan Supreme Court Justice Diana Hathaway and her husband of fraud, saying they systematically and fraudulently transferred property out of their names and hid assets in order to secure a short sale with their mortgage company.

The feds say Hathaway laundered money on her way to convincing her bank to forgive $600,000 in debt for Hathaway and her husband. Their probe into Hathaway was sparked by a 7 Action News Investigation .

Now, the feds are going after Hathaway’s $750,000 Florida home that she transferred out of her name and into a stepdaughter’s name while she was seeking the short sale.

This comes on the heels of an FBI investigation that was prompted by our own 7 Action News investigation earlier this year - that raised questions about Hathaway’s dizzying property shuffle that took place prior to her short sale.

Late Tuesday, Chief Justice Robert Young issues a statement.

"It is a dreadful development to have any sitting judge accused of fraud and money laundering," Young said.

"Justice Hathaway or her lawyer should clear the air and explain these transactions."

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