Feds say fmr. Supreme Court Justice Diane Hathaway deserves up to 18 months in prison

DETROIT (WXYZ) - Federal prosecutors aren't going easy on former State Supreme Court Justice Diane Hathaway, who will be sentenced for bank fraud next week. In a new court filing, they call her greedy and say that she used her step children to hide her crime.

Federal prosecutors write that Hathaway's scheme is "...the essence of an intentional crime… driven by the greed to obtain even more—crime committed by those with means."

The feds 11-page sentencing memorandum reads like our 7 Action News Investigation, which first exposed Hathaway's elaborate scheme. They say she siphoned money from her retirement accounts to purchase properties that she hid in her stepchildrens' names.

Attorneys say Hathaway hid assets totaling more than $1 million dollars to fool her bank, who later forgave more than $664,000 in mortgage debt ($664,510) on her Grosse Pointe Park home

For her crime, the federal prosecutors wants U.S. District Court Judge John Corbett O'Meara to send Hathaway to prison for 12 to 18 months.

But Hathaway's attorney argues that she should serve no time behind bars because she is a "…kind, generous, caring person…," which is supported by letters to the court from family and friends.

Hathaway's attorney says she should instead be put on a tether, do community service at a homeless shelter in Florida where she wants to live, and pay no more than $30,000 in fines.

Hathaway's sentencing is scheduled for May 28. She faces up to 18 months in prison and up to $120,000 in fines and restitution.

Contact 7 Action News Investigator Ross Jones at rjones@wxyz.com or at (248) 827-9466.

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