Tuesday, November 27, 2012

State High Court Justice, Hubby Accused Of Doing Illegal 'Short Sale Shuffle' To Hide Title To Orlando-Area Abode While Unloading Underwater Michigan Mansion Gear Up To Fight Feds' 'Forfeiture-Snatch' Move

In Detroit, Michigan, the Detroit Free Press reports:

  • Michigan Supreme Court Justice Diane Hathaway, who is facing political pressure to resign amid a real estate scandal, isn't going down without a fight, her lawyer said.

    Hathaway, who is accused of hiding assets to justify a short sale of a $1.5-million Grosse Pointe Park home, is preparing to fight the forfeiture of a Florida home that federal prosecutors say was hidden from a bank to justify the short sale.

    "Justice Hathaway and her husband will certainly fight to keep their home, as would anyone else if the government tried to take their home," Hathaway's lawyer Stephen Fishman said Wednesday.

    Fishman's comments came a day after the U.S. Attorney's Office filed a civil complaint that says Hathaway and her husband, attorney Michael Kingsley, transferred a home in Windermere, Fla. to Kingsley's daughter before seeking a short sale of a home in Michigan. That short sale allowed Kingsley and Hathaway to erase nearly $600,000 in mortgage debt on the $1.5-million house in Grosse Pointe Park, which sold for $850,000, public records show.

    Hiding assets to justify a short sale can be considered illegal because it is done to defraud the bank or financial institution that holds the mortgage.

    Hathaway and Kingsley have not been charged [criminally]. The U.S. Attorney's Office declined to comment on whether she could be charged down the road, but noted that the forfeiture complaint is a civil matter, and that such complaints don't necessarily precede criminal charges.
  • According to the civil complaint filed in U.S. District Court, before Hathaway and Kingsley submitted a hardship letter to the bank in support of their request for a short sale, the couple "systematically and fraudulently transferred property and hid assets in order to support their claim to ING (Bank) that they did not have the financial resources to pay the mortgage on the Michigan property."

    The complaint says Hathaway and Kingsley quit-claimed the Florida property to Kingsley's daughter. The daughter then quit-claimed the property back to them after the short sale.

    The hardship letter was written Dec. 10, 2010. The house sold almost a year later.

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