“FBI reportedly investigates Michigan Supreme Court justice”

The Detroit News on October 31, 2012 released the following:

“Hathaway’s real estate transactions questioned

By Robert Snell and Chad Livengood

Detroit — The FBI is investigating real estate transactions Michigan Supreme Court Justice Diane Hathaway made last year that allowed her to drop nearly $600,000 in mortgage debt on a $1.5 million Lake St. Clair home, sources familiar with the investigation told The Detroit News.

Sources said the probe was launched after news reports in May revealed Hathaway and her husband, trial attorney Michael Kingsley, transferred at least two of their homes to relatives before a bank allowed them to unload the home on Lakeview Court in Grosse Pointe Park in a November 2011 short sale.

The FBI tried to reach out to Hathaway’s family through interviews, said a source close to the investigation.

Real estate experts and the Democratic Party-nominated justice’s Republican political opponents have questioned whether Hathaway and Kingsley hid assets and committed mortgage fraud after the two homes were returned to the couple shortly after the short sale.

On Tuesday, Hathaway’s lawyer, Steve Fishman, declined to comment, as did the FBI.

Elected in 2008, Hathaway is not on the ballot this year, but Republicans are using questions surrounding her real estate dealings in recent radio and print advertising.

Public records show Hathaway and Kingsley’s Lakeview Court home was sold Nov. 8, 2011, on a short sale for $850,000, approximately $625,000 less than the couple borrowed in 2007.

To get a short sale, banks typically require homeowners to prove they are suffering a financial hardship and check for other assets, such as second homes. Hathaway makes $164,610 annually as a justice. Kingsley is an attorney.

Records show the couple transferred two homes to individuals identified by WXYZ-TV (Channel 7) as Hathaway’s stepchildren. A home in Windemere, Fla., was quitclaim deeded to Hathaway stepdaughter Kathryn Sterr in November 2010, and a home on Windmill Pointe Drive in Grosse Pointe Park was transferred to Michael James Kingsley Jr. in September 2010.

The Florida home was transferred back to Hathaway earlier this year, public records show.

Property records also show Sarah Kingsley — identified as another Hathaway stepdaughter — bought a home on Balfour Street in Grosse Pointe Park in April 2011 with $195,000 cash and quitclaimed the home to Hathaway less than a month after the short sale. No money traded hands, records show.

Dan Pero, president of the American Justice Partnership and a GOP political consultant, has filed an ethics complaint against Hathaway with the Judicial Tenure Commission, and his group has aired radio ads questioning Hathaway’s house swaps.

“There are literally tens of thousands of people in this state whose homes were lost through short sales … and yet Justice Hathaway was able to get out from under $600,000 worth (of debt) while she still owned two other homes,” Pero said.

Hathaway, a former Wayne Circuit Court judge, reportedly lives at the Balfour home and hasn’t commented on the transactions. In May, Supreme Court Chief Justice Robert Young Jr., a Republican nominee, urged Hathaway to “clear the air” on the transactions. Young recently declined further comment.

State records show Hathaway obtained her real estate broker’s license in 1987 and has maintained her license during her 16 years as a Wayne County judge and four years on the Supreme Court. Hathaway completed a continuing education course on short sales and foreclosures in October 2010, and last month she completed a course in “advanced real estate ethics and standards,” according to the Michigan Department of Licensing and Regulatory Affairs.

She also has taught real estate law in continuing education courses to brokers, according to her Supreme Court biography.

The News has tried to reach Hathaway for comment about the Republican ads highlighting her real estate transactions.

Southfield attorney Brian Einhorn called the newspaper back recently at Hathaway’s behest.

Einhorn said Hathaway has explained the transactions, but refused to say to whom she explained them.

Einhorn wouldn’t say whether he’s providing legal representation to the justice, only that “I’m a friend of hers.” He also was surprised to learn the FBI is looking into Hathaway’s personal transactions.

“To my knowledge, she’s never been contacted,” Einhorn said. “If that were to happen, I would know about it. I would know if there was an FBI investigation.””


Douglas McNabb – McNabb Associates, P.C.’s
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