Jessica M. Karmasek May 28, 2013, 5:30pm

DETROIT (Legal Newsline) -- Prosecutors want former Michigan Supreme Court Justice Diane Hathaway to serve 12 to 18 months in jail for bank fraud.

The U.S. Attorney's Office made the recommendation in a sentencing memorandum filed in the U.S. District Court for the Eastern District of Michigan, Southern Division, Thursday.

"Given the defendant's (i) obvious knowledge of the law from serving approximately five years as a prosecutor and over twenty years on the bench, and (ii) her knowledge of real estate transactions as a licensed broker since the late 1980s, the defendant made a well-informed decision to commit bank fraud for her financial benefit," U.S. Attorney Barbara McQuade wrote in the 11-page memorandum.

She continued, "This was not a crime resulting from a single decision or a momentary impulse. This was a calculated crime that was committed over a significant period of time and involved the use of the defendant's own stepchildren to aid in the concealment of assets. In order to perpetuate this criminal activity, multiple discrete acts and decisions were required."

McQuade argues in the filing that the 12- to 18-month jail sentence would serve to "adequately punish" Hathaway for her "methodical, thoughtful and sophisticated criminal conduct" that spanned over two years and caused about $100,000 in losses to a financial institution.

"In addition, this sentence would deter the defendant and others from future criminal conduct and, in particular, economic crime," the prosecutor wrote.

Hathaway's sentencing is set for Tuesday afternoon in Ann Arbor.

The former justice took office in 2009 and served until her resignation in February.

Hathaway stepped down after pleading guilty to committing bank fraud in connection with property owned in Grosse Pointe Park, Mich.

During a Jan. 29 hearing before U.S. District Judge John Corbett O'Meara, she admitted that between 2010 and 2011 she knowingly engaged in a scheme to defraud ING Direct Bank by concealing assets from the bank to qualify for a "short sale."

A short sale is a forgiveness of debt by the bank to a borrower who claims financial hardship.

It is often used as an alternative to foreclosure because it reduces additional fees and costs to both the creditor and borrower.

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