Michigan Supreme Court justice subject of grand jury probe

By Charlie LeDuff Fox 2 News Reporter

GROSSE POINTE PARK, Mich. (WJBK) -- As if the feds weren't already hanging more paper than an interior decorator on suspect government officials out of Wayne County, Fox 2 has confirmed yet another grand jury investigation.

This time it's Michigan Supreme Court Justice Diane Hathaway, who told her bank she was too poor to live in tony Grosse Pointe Park, and the bank agreed.

So what's she doing living in tony Grosse Pointe Park?

This is a tale of four houses. Let's begin with the one of Lakeview where she lived with her husband, a successful slip and fall lawyer. They said they couldn't afford the $1.5 million mortgage and had to move out, so the bank allowed them to sell the home for about half of what they owed on it. That's called a short sale.

"You have to demonstrate a hardship, something that's changed in your life that no longer allows you to meet your obligations on a mortgage loan. What we see most commonly is a change in employment status, a change in marital status or some sort of health concerns," said real estate lawyer T. Scott Galloway.

But what hardship? She's got a job, he's got a job, and they own two other houses. The feds think this whole deal might be garbage.

Before she was approved for the short sale, she gave away one of her homes to her stepdaughter, a swanky pad in Florida with a boat dock worth three quarters of a million dollars. A house that they owned outright.

She also gave a home to her stepson just a stone's throw away from the short sale house. She paid $170,000 cash for it in 2010.

Last November, the short sale went through and Hathaway sold her $1.5 million mortgage to a guy for $850,000.

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Michigan Supreme Court justice subject of grand jury probe