GROSSE POINTE PARK (WXYZ) - In her 2008 run for Supreme Court Justice, Diane Hathaway vowed to be different.
"She knows we must restore fairness and honor to the Michigan Supreme Court.," said a 2008 campaign commercial.
But there are new questions about whether she broke that promise on her way to unloading her underwater Grosse Pointe Park home. As we reported earlier this month, Hathaway did it by having a short sale. That's when a homeowner convinces the bank to sell their home at a loss rather than go into a foreclosure. It can save them hundreds of thousands of dollars in mortgage payments.
But prior to Hathaway's sale, she shuffled two homes out of her name: a Florida home went to her stepdaughter, and a second home in Grosse Pointe Park went to her stepson.
After the bank agreed to the short sale on Hathaway's Lake St. Clair home and the Florida home went back into Hathaway's name.
The home where Hathaway's living now was just recently put into her name, but its first owner was Hathaway's stepdaughter. According to records, she bought it for almost $195,000 in cash around the same time Hathaway's bank was mulling over her short sale.
But that same stepdaughter already has a mortgage for more than $166,000 on a home in Grosse Pointe Woods. Hathaway won't say whose cash was used to pay for that home, but it was put in her name after the short sale.
And whether she crossed a line or not, she should know where it is. 7 Action News has learned that Hathaway taught real estate law to other brokers before becoming a judge. State records show she still has an active real estate brokers license.
Hathaway has been a judge for 20 years now, but she knows what it's like to be sued. In 2004, a civil suit filed by Tim and Carrie Moore accused her of fraud. The Moores bought a property in Grosse Pointe Park from Hathaway and said she never mentioned already selling a piece of it to a neighbor.
The Moores only learned of the sale years later when that neighbor started building a fence on the property. Hathaway filed a counter-suit blaming the title company, and the parties ultimately settled out of court. The Moores wouldn't talk on camera, but said Hathaway cut them a check.
Short sales aren't typically given to people who've netted big raises, but Hathaway has. She went from making $139,919 as a Wayne County Judge in 2008, to $164,610 when she was elected to the Supreme Court bench.
That may have been news to Hathaway's bank. According to experts like former federal prosecutor Peter Henning, banks sometimes fail to do their due diligence when looking into a client's finances.
"Sometimes a bank will be sloppy, or on some individual transactions...they won't dig down too deep, simply because they don't have the time, " Henning said.
Without answers from Hathaway, Henning says it's hard to know if she crossed any legal lines. He said anyone providing false financial information to a bank could face potential charges, but noted that any possible charge would be dependent on what was disclosed to the bank, and if any information was withheld.
Hathaway's colleague Chief Justice Robert Young urged her to start explaining her property shuffle after we broke the story earlier this month. In a statement, he asked her to "respond publicly" to what we reported. Instead, she referred reporters to high-profile criminal defense attorney Steve Fishman.
But Fishman wasn't talking either, so we had to find Hathaway at the Supreme Court in Lansing.
"Justice Hathaway, may we have a word," 7 Action News Investigator Ross Jones asked Hathaway as a recent court hearing adjourned. She did not respond.
"The Chief Justice has asked you to explain these transactions, do you plan to do that," Jones asked.
Again, Hathaway said nothing. The supreme court justice ducked out a back door, escaping the questions for another day.
The FBI, Michigan Attorney General office and the Judicial Tenure Commission would not confirm whether they are actively investigating Hathaway's property shuffle.
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