Detroit ? A federal judge Wednesday temporarily halted attempts by the government to seize Michigan Supreme Court Justice Diane Hathaway's home in Florida, a possible sign Hathaway is considering a deal in the controversial land transaction case. According to federal court records, U.S. District Judge Marianne Battani ordered a 90-day stay in the federal government's attempt to seize Hathaway's posh second home in suburban Orlando.
The filing Wednesday indicates pursuing forfeiture of Hathaway's home would hurt the government's criminal investigation and prosecution. A deal could be anything up to and including her resignation and pleading guilty to criminal charges.
The stay could give Hathaway time to resolve the FBI case and the government's forfeiture complaint, said Peter Henning, a former federal prosecutor who handled bank fraud cases.
"This is a sign that something is brewing," Henning said. "Which direction the case is going to go is still very much shrouded in secrecy. A stay lets you concentrate on either resolving this or dealing with any kind of criminal investigation. This gives everybody a chance to catch their breath."
Hathaway's lawyer Steven Fishman and the U.S. Attorney's Office agreed to the stay. Fishman declined comment Wednesday.
A spokeswoman for U.S. Attorney Barbara McQuade called the stay "standard procedure."
Hathaway and her husband were accused last month of committing bank fraud by hiding an asset to avoid $600,000 of mortgage debt on a $1.5 million Grosse Pointe Park home.
Hathaway and her husband, attorney Michael Kingsley, have denied the allegations, which include money laundering, and demanded a jury trial in the civil case.
The government's Nov. 19 civil complaint claims the justice and her husband "systematically and fraudulently transferred property and hid assets in order to support their claim to (ING Direct) that they did not have the financial resources to pay the mortgage on the Michigan property."
Civil asset forfeiture is often used as "leverage" in investigations and is easier to prove than criminal charges, Henning said.
It's been nearly four decades since a sitting Supreme Court justice faced this type of legal scrutiny. In 1975, former Gov. John Swainson was indicted on charges of bribery and lying to a federal grand jury while he was a justice. He beat the bribery charge, but served a brief sentence for a perjury conviction.
The Michigan Republican Party wants Hathaway, a Democratic Party nominee, to resign. Chief Justice Robert Young Jr., a GOP nominee, has said she "ought to clear the air" about her real estate transactions.
"We would all be better served if Justice Hathaway would step aside, get this taint off the court and let us move ahead," said Dan Pero, president of the American Justice Partnership, who filed an ethics complaint against Hathaway with the Judicial Tenure Commission.
If Hathaway were to resign, Gov. Rick Snyder would appoint a replacement to serve until a 2014 special election, potentially giving Republicans a 5-2 majority on Supreme Court.
Hathaway, who makes $164,610 annually as a justice, and her husband did not inform the bank they transferred the Windermere, Fla., home to a relative before applying for a short sale in 2011 on a $1.5 million Grosse Pointe Park home on Lake St. Clair, according to the federal forfeiture complaint.
To get a short sale, in which the home is sold for less than the mortgage owed, banks typically require homeowners to prove they are suffering a financial hardship and check for other assets, such as second homes.
Hathaway, a licensed real estate broker, has been under scrutiny since May when questions were raised in a WXYZ-TV report about why she and her husband transferred two homes to Kingsley's children before the short sale.
Records show the Windermere home was quitclaim deeded to Hathaway's 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, valued at $664,000 in 2010, was transferred back to Hathaway in March, public records show.
rsnell@detnews.com
(313) 222-2028
Source: http://www.detroitnews.com/article/20121220/METRO/212200361/1409/rss36
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