American Savings Bank officials were warned about the questionable behavior of a bank employee before she allegedly stole more than $600,000 from an elderly customer.

A Jan. 28, 2005, internal bank memo, obtained by The Advertiser, shows that by October 2004 a bank vice president and two branch managers knew of complaints that Marilyn De Motta, a supervisor at the Hawai'i Kai branch, might be taking advantage of her customer, Ada Lim.

The bank did not fire De Motta until February 2005, after she had used Lim's money to buy a Waipahu condo and set up a $212,000 account for De Motta's father.

The memo, from Aimee Ogata, manager of American Savings' Liliha branch, represents the latest challenge to the bank's version of events.

Last month the 91-year-old Lim sued American Savings, Hawai'i's third largest financial institution, alleging De Motta stole $688,000 from her.

American Savings CEO Constance Lau responded to the suit, saying the allegations were "outrageous." Lau said the bank "terminated (De Motta) promptly, following our own internal investigation."

However, in the memo, Ogata said she urged the Hawai'i Kai branch manager in September or October 2004 to reprimand and investigate De Motta.

"I warned him that he should be certain that she's not soliciting other ASB customers and abusing her position at the bank," Ogata wrote. "I advised him that he should take actions to reprimand her ... and to investigate her activity since she is creating suspicion with so many people outside our bank."

Ogata said she learned of De Motta's actions from an acquaintance who had been Lim's accountant.

When asked about the memo last week, American Savings attorney John Knorek said: "In retrospect, maybe somebody could have said, 'Maybe we should have looked further.' But at the time, you have to give credence to the manager's judgment and responsibility to say, 'I've looked into this, I told her to stop it, I've checked into her personal finances, there doesn't seem to be anything inappropriate at this time.' "

The Hawai'i Kai branch manager, Wilson Ho, ordered De Motta to stay away from Lim as soon as he learned De Motta was helping Lim with her taxes, bank attorneys said. But De Motta did not follow the orders.

The bank said it had no reason to suspect that De Motta was stealing money from Lim until January 2005.

De Motta said in an interview last month that Lim lent her the money. She blamed the bank for not adequately supervising her.

Ho declined to comment when contacted last week. Ogata, the author of the memo and Liliha branch manager, also declined to comment.

The bank's attorneys also noted that state Adult Protective Services officials conducted an investigation into Lim's case and found no evidence of abuse. An Adult Protective Services spokes-man said they cannot comment on investigations.

The FBI has questioned people involved in the case and American Savings said it is cooperating with the federal investigation.

A separate Aug. 2 lawsuit filed by Bert Corniel, American Savings' former security director, alleged that the bank attempted to cover up fraud cases. The bank responded that Corniel was a disgruntled former employee who was passed over for a promotion.

Bank experts say in cases involving the elderly, there is an extra burden on financial institutions to prevent fraud.

"Elderly customers are a customer class that is susceptible to being defrauded by bank employees and outsiders. That's why special care is needed," said Bert Ely, an Alexandria, Va.-based banking consultant who forecast the savings and loan crisis of the late 1980s.

American Savings attorneys said its employees are sensitive to the needs of the elderly. The attorneys said, however, they are not aware of any special training to deal with elderly issues.

Tom Tarter, a former president of the Bank of Los Angeles who now advises financial institutions on corporate governance issues, said the bank should have begun an investigation after it found out that De Motta was preparing Lim's taxes because the bank does not normally provide such services and because De Motta may not possess the required license or appropriate training as a tax preparer.