ANN ARBOR, Mich -

Democrat Diane Hathaway pleaded guilty Tuesday in Ann Arbor federal court and faces 1 1/2 years in prison under a deal with prosecutors. She resigned last week.

--Former Michigan Supreme Court Justice Diane Hathaway
Prosecutors say Hathaway and her husband transferred a debt-free Florida home to a relative so that they'd qualify to short sell a Grosse Pointe Park home that carried a big mortgage. After they unloaded the Michigan property in a 2011 short sale, the Florida property was transferred back to them.
Hathaway's husband wasn't charged.
In short sales, banks let distressed owners sell property for less than what's owed on it.

Hathaway lawyer: Probation appropriate, not prison

Steve Fishman

The attorney representing Hathaway says he'll argue for probation when she returns to court on May 28.

Hathaway possibly faces up to 18 months in prison for bank fraud, although lawyer Steve Fishman says the guidelines should be lower. No matter where the guidelines rest, he hopes federal Judge John Corbett O'Meara chooses probation over prison.

Fishman says Hathaway already is facing the consequences of her crime. She quit the Supreme Court last week, halfway through an eight-year term as a statewide elected public official.

Where the story began:

Michigan Supreme Court justice denies wrongdoing in bank fraud allegations

Lawyer says Michigan Supreme Court justice will fight to keep house

Commission wants Michigan justice suspended in fraud case

Lawyer says Michigan Supreme Court Justice Diane Hathaway will retire Jan. 21