Funeral-plan theft nets 2-month sentence

By Kevin Dayton
Advertiser Big Island Bureau

HILO, Hawai'i — A Big Island judge yesterday ordered Robert Diego to serve two months in jail for his part in a theft case that drained an estimated $531,000 from a trust fund set up to hold money from funeral plans he sold.

Diego

Deputy Attorney General Rick Damerville said Robert Diego "got an incredible break."

"I don't criticize judges in public, but I think Mr. Diego deserved more time," Damerville said.

He characterized Diego as the head of a long-term "scam," and asked that he be sentenced to a year in jail "to send a message that we won't tolerate this behavior."

Yoshioka said a year in jail would be "too severe a punishment." Instead he sentenced Diego to five years' probation including a year in jail, but then suspended all but two months of the jail sentence. He said Diego could serve every other week in jail until his term is completed.

The judge noted Diego had no previous criminal record and "as of yet, no plan member has suffered a financial loss."

West Hawai'i Mortuary has been honoring the funeral plans sold by the Diegos, and West Hawai'i owner and partner Ranalynn Naipo said the company will continue to do so. West Hawai'i Mortuary is owned by two of the Diegos' children, but is not affiliated with the Diegos' Memorial Mortuary in Hilo.

Damerville said at least 250 plans are still outstanding, and more than $500,000 that should be in the trust fund is gone.

"The realities are, when you look at the $530,000 elephant out there, Mr. Diego, who is 61 years old, is never going to satisfy those $530,000 in clients," Damerville said.

Defense attorney Brian De Lima said Diego was ready to serve a jail sentence, but noted he has a serious heart condition.

De Lima said the Diegos should have filed for bankruptcy in the early 1990s when they ran into financial trouble, but instead began using money collected from new clients to pay for funerals for old clients.

"What they did was try to save face without admitting their inability to make this business run," De Lima said.

Damerville said the state Department of Commerce and Consumer Affairs knew in 1986 and 1987 that money was missing from the trust fund, and said the department should have notified the state Department of the Attorney General. Instead, the department entered into a consent decree with the Diegos that allowed the business to continue, he said.

The Diegos' financial problems worsened and "inevitably this day was going to come because there's no money," Damerville said.

Some of the victims in the case had urged the judge to impose a harsher sentence. One was Thelma Martin, 71, who said she believes two years in prison would have been a more appropriate punishment.

"Maybe he would have time to think about it," said Martin, a Honoka'a resident. "About his health condition, that's just too bad, because we've done a lot of suffering, too. It's not enough to me."

Martin, a widow for 22 years, said she bought a funeral plan from Diego 19 years ago for $2,400. When she heard about the criminal investigation three years ago, she called Diego and he assured her the funeral plan was sound.

"He lied and lied," she said.

She wrote three letters demanding a refund, but never got one, she said. "He has caused me a lot of grief. Twenty-four hundred dollars is a lot to a widow," she said.

Others asked Yoshioka to allow the Diegos to remain free so they will be able to honor the funeral plans. One was Betty Lou De Sa, 71, who said the Diegos buried her husband nine months ago.

"Maybe what they have done is wrong, I don't know, I'm not a judge," she said. "We don't want them in jail. All we want them to do is make good on our plans, and when the time comes, bury us."

The Diegos and their companies, Diego Mortuary Inc. dba Memorial Mortuary, and Memorial Mortuary Funeral Plans Inc., were indicted in 2002 on 39 counts of first- and second-degree theft, and last year the three family members pleaded no contest to one count each of first-degree theft.

Yoshioka in April approved a plan to have each of the three pay $50,000 in restitution to people who bought funeral plans from Memorial Mortuary Funeral Plan Inc., beginning with payments of $100 a month each.

All three of the Diegos stood before Yoshioka yesterday to apologize and tell the judge they took responsibility for the crimes.

"I would like to apologize to all of the victims that we have hurt so badly, and I understand why you feel like that," Momi Diego said.

Yoshioka granted a request for a deferred acceptance of plea for Bobbie Jean Diego, which means she will have a chance to clear her record after five years if she complies with the terms of probation.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or (808) 935-3916.