Feds Back Off Legal Challenge to State Pot Laws

By: Timothy P. Flynn

Since the Obama Administration began in 2009, we've seen memos like this at least twice before.  But last week's long-awaited Department of Justice memorandum concerning federal law enforcement policy regarding marijuana appears to be the most significant policy statement yet, and may have the most far-reaching consequences.

In a memo to all United States Attorneys, the Deputy Attorney General, James M. Cole, advises prosecutors that the Justice Department will not be challenging the recently-passed state laws legalizing marijuana in Colorado and Washington.  Also, the memo instructs prosecutors not to base pot distribution charging decisions on the size or profitability of local marijuana dispensaries.

The policy statement was significant to the legal marijuana industry in those states as well as to the medical marijuana growers and dispensary owners throughout the country.  One of the roadblocks to the development of the industry in general has been the confusion and anxiety arising when state laws say "go", but federal law still says "no".

While this memo provides some assurances to the, er, "industry professionals" [some would say, "criminals"], it does not change the basic fact that marijuana remains a Schedule 1 drug: i.e. criminalized due its high potential for abuse, with no proven medical benefits.  Just ask the owners and operators of the dozen dispensaries recently mothballed in Northern California courtesy of Melinda Haag, the U.S. Attorney in California.

The pot lobby views the DOJ's most recent policy statement as "more good than bad."  Their optimism comes from the DOJ's encouragement of large for-profit dispensaries that adhere to DOJ guidelines, and the invitation for other states to legalize pot.

Banks and insurance companies, however, have yet to buy into the transition of the marijuana industry from a craft-oriented enterprise to industrial production.  Until that occurs, the pot farmer will just have to sleep with one eye open.

Post Script:  Here is some of the fall-out to the DOJ's policy shift announcement from Congress, here and here.

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Posted in: dispensary,James M. Cole,Justice Department,marijuana,Melinda Haag,United States Attorney

Vacancy Tarnishes Michigan Supreme Court

Diane Hathaway with President Obama

Last Friday, the US Attorney filed federal criminal charges [bank fraud] against the now-former Michigan Supreme Court Justice Diane Hathaway; her last official day was Monday, although she has been absent from the bench for weeks.  This is yet another case that gives the public pause, and erodes the confidence we place in our publicly elected officials; especially jurists; especially those elected to the Michigan Supreme Court.


By now, this story is well-known.  Ms. Hathaway and her husband are alleged to have concealed an intra-family transfer of a parcel of Florida real estate in order to get a short-sale approved which resulted in a mortgage loan forgiveness of more than $600,000.

The feds assert that the intra-family transfer was not disclosed to the mortgage lender to intentionally trick the lender into believing the Hathaways were suffering an economic hardship.  Once the short sale was approved, the Florida property was transferred back to the Hathaways.

Seems like a slam dunk prosecution.  Because the federal charging instrument filed in the case was an "information", a guilty plea is expected to be tendered by Hathaway next Tuesday in U.S. District Court.

We here at the Law Blogger have seen many of our divorce clients, while suffering genuine intense economic hardship, have their short sale offers or their loan modification applications rejected.  But even the notion of a sitting Supreme Court Justice applying for a short sale strikes us as untenable.  This whole story falls squarely within the category of: "What were they thinking?"

Thinking back to the November elections of 2008, when Hathaway was elevated from the Wayne County Circuit Court to the High Court, this blog recalls all those attack ads about former Justice Cliff Taylor depicted [via cleaver video editing we might ad] falling asleep during oral arguments.  In the long-run, however, any faith Michiganders placed in Hathaway to replace the pro-insurance Taylor was squandered.

At Hathaway's inevitable sentencing, she will be ordered to pay back the mortgage deficiency.  But we have to wonder: will she also be sentenced to federal prison?  Perhaps she will be able to avoid a prison sentence by tendering a guilty plea.  Wow, a former Michigan Supreme Court Justice pleading guilty in a federal courthouse.

One of the consequences of Hathaway's resignation from the High Court is the imminent appointment of a replacement.  One name that has been floated is Oakland County Circuit Judge Colleen O'Brien.  And if she gets the appointment, Governor Snyder will also have the opportunity to appoint O'Brien's replacement to the Oakland Circuit.

We can hardly wait.  Stay tuned.

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Posted in: bank fraud,Justice Clifford Taylor,Justice Diane Hathaway,Michigan Supreme Court,Oakland Circuit Judge Colleen O'Brien,Oakland County Circuit Court,United States Attorney

Debt Relief: Student Loans

Ever since the Great Recession put the strangle hold on the U.S. economy back in 2008, the default rate on student loans has skyrocketed.  This in turn has increased the debt collection case-load among the various United States Attorneys.

Michigan, hit particularly hard in the recession, is ranked 11th among the states in overall student debt load.  A full ten percent of the loans to Michigan students are defaulted.  The problem has become so acute, the U.S. Attorney's Detroit office hired a private law firm to aggressively pursue claims against students that defaulted on federal government loans.

Due to the number of public and private educational institutions located within the jurisdiction of the United States District Court for the Eastern District, and considering the drastic tuition increases to which these institutions have resorted, the USDC - EDMich has one of the most robust civil collection dockets in the nation.

It is crucial for college grads, law students, and other graduate students to avoid getting enmeshed in this collection docket.  Unfortunately, bankruptcy is not an option for educational loans.

The crux of the problem is that the ever-increasing student loan burden is met at graduation with a continuously shrinking job market. A veritable disaster waiting to happen; a disaster that is happening.

What is a graduate to do?  First, do not ignore the problem.  These loans will not go away, regardless of the nievete or hard luck of the student borrower.  Ignoring the debt will only remove any repayment options such as forbearance or rehabilitation periods.

Second, student debtors should thoroughly educate themselves on the student loan statutes and regulations prior to commencing negotiations with the federal lender or collection entity.  The Internet is an excellent source of information that will lead the borrower to primary resources.

Third, consider hiring legal counsel to assist you with negotiations with the lender; definately hire legal counsel if you have been sued.

Fourth, if you are a current student, scour the Internet for as many grant and scholarship opportunities as you can find prior to executing additional loans.  There is "free" money out their for students; you just have to find it.

Finally, be realistic when establishing your educational goals.  Avoid paying out-of-state tuition if at all possible.  Michigan has many great institutions of higher learning that fit the bill.

Good luck out there getting educated.  Take it seriously as you are mortgaging your future to obtain your degree.

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Posted in: attorney,bankruptcy,Detroit,forbearance,student loan,United States Attorney,United States District Court