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The Honolulu Advertiser
Posted on: Friday, April 23, 2010

Guilty plea ends Isle bank scandal

By Jim Dooley
Advertiser Staff Writer

Former American Savings Bank supervisor Marylin P. Demotta yesterday pleaded guilty to two theft charges, effectively ending an internal bank scandal that spawned two million-dollar civil suit settlements and a long-running criminal case.

Demotta, 43, reached a plea agreement in which she admitted to two counts of theft of government property. Prosecutors dismissed eight other charges of bank fraud and embezzlement.

Demotta was an assistant manager at the bank's Hawai'i Kai branch in 2004 when she became involved in the personal business affairs of a 92-year-old bank customer, Ada Lim.

Lim and her family later sued the bank, alleging that Demotta used her position to take hundreds of thousands of dollars from Lim.

The former security director of the bank filed a separate suit against American Savings, alleging that his superiors told him not to report Demotta's activities to federal regulators.

American Savings denied wrongdoing, but settled both civil suits for about $1 million each.

Fighting back tears yesterday, Demotta, who now lives on the Mainland, was asked to describe her crimes to U.S. Magistrate-Judge Barry Kurren.

Demotta began to speak at length about her dealings with Lim, saying that the elderly woman had called her many times and asked Demotta to make a short-term investment for her.

Demotta's lawyer, Richard Kawana, then had a whisperered conference with her and she quickly admitted guilt to the two charges against her.

Demotta will be sentenced Aug. 9 by Chief District Judge Susan Oki Mollway.

Assistant U.S. Attorney William Shipley said the maximum punishment for Demotta's crimes is 10 years in prison and a $250,000 fine.

She is likely to receive a sentence considerably lower than the maximum.

Shipley said Lim was repaid all her money.

Demotta arranged for some $200,000 capital gains tax payments owed by Lim to be deposited in an American Savings account called an I-Plan account, which Demotta opened for Lim, Shipley said.

Demotta's motivation for making those deposits, Shipley said, was to help her bank branch win an internal bank competition for I-Plan deposits.

The branch did win the contest, which resulted in branch employees and supervisors winning cash bonuses of $1,000 to $5,000.