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Ex-Mich. Justice Pleads Guilty to Bank Fraud

Posted at: 01/29/2013 10:04 AM

ANN ARBOR, Mich. (AP) - A former Michigan Supreme Court justice has pleaded guilty to bank fraud in a scandal that ended her career on the state's highest court.

Democrat Diane Hathaway pleaded guilty Tuesday in Ann Arbor federal court and faces 1 ½ years in prison under a deal with prosecutors. She resigned last week.

Prosecutors say Hathaway and her husband transferred a debt-free Florida home to a relative so that they'd qualify to short sell a Grosse Point Park home that carried a big mortgage. After they unloaded the Michigan property in a 2011 short sale, the Florida property was transferred back to them.

Hathaway's husband wasn't charged.

In short sales, banks let distressed owners sell property for less than what's owed on it.

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