Banker pleads guilty

Hilo woman took nearly $2.7M from First Hawaiian Bank

By JOHN BURNETT

Tribune-Herald staff writer

A former assistant vice president of First Hawaiian Bank’s Hilo branch pleaded guilty Friday in U.S. District Court in Honolulu to embezzling almost $2.7 million from the bank.

Lani-Ann M. Miho faces up to 30 years imprisonment and a fine of up to $1 million. Sentencing is set for June 4 before federal Judge J. Michael Seabright.

“There is a plea agreement which is not binding on the court,” said William McCorriston, a Honolulu attorney representing Miho, and added the deal “doesn’t include a specific agreement as to a (prison) term or monetary fine.”

McCorriston said his 52-year-old client still lives in Hilo, but spends much of her time in Manoa taking care of her mother.

“She’s no longer employed by First Hawaiian Bank and there was no adverse customer impact as a result of her employment here,” said Brandt Farias, FHB’s executive vice president of marketing and communications.

First Hawaiian Bank is insured by the Federal Deposit Insurance Corp. (FDIC), which insures each depositor to at least $250,000 per insured bank.

According to a written statement by the U.S. District Attorney’s office, Miho, who worked for the bank for 29 years, set up fraudulent loans for about 56 nonexistent customers and opened bank accounts in their names, withdrawing money and using the proceeds from recently opened accounts to pay balances due on earlier loans. She illegally converted money for her own personal use between July 2000 and September 2010.

“The scheme went on for a decade between branches on Oahu and Hilo, where she was working,” said FBI Special Agent Tom Simon. “The bank had to do a massive audit.”

In a written statement, the District Attorney’s office said that Miho obtained $2,683,494.13 from the bank, including fees and interest. Over the course of her embezzlement, Miho repaid $2,074,044.69, leaving what the District Attorney called “a net loss to First Hawaiian Bank of approximately $609,449.60.”

“Although she stole over $2.6 million dollars over the decade of her scheme, at the end of the day, when First Hawaiian Bank discovered it, there was around $600,000 in loans outstanding to the bank that had gone into delinquency because the whole thing collapsed,” Simon said. “… It’s like a check-kiting scheme. To keep this going, you have to do it in perpetuity or win the lottery if you’re going to make the bank whole.

“It should be noted, to her credit, that after the FBI confronted her and she told us her side of the story, she actually paid back the $600,000 that was lost to the bank. So the bank, right now, has already been paid its restitution by her.”

McCorriston disputed Simon’s timeline of Miho’s restitution to the financial institution.

“The total amount of money was repaid to the bank before there was any FBI investigation, before there was any referral of this for criminal prosecution,” McCorriston said. “Even before there was any discovery of wrongdoing by the bank of the problem, Lani had repatriated over $2 million of that sum to the bank, and the rest she paid to the bank after the bank began its investigation. … She and her family made restitution on their own, without compulsion.”

Asked if his client had repaid the bank before her termination in late 2010, McCorriston replied: “I can’t answer that specifically. I believe not, but certainly the discussions to repay it occurred before her termination. That had nothing to do with the criminal prosecution. That all was resolved internally with First Hawaiian Bank.”

McCorriston said Miho has been “diagnosed with a psychological disorder which played a prominent role in this problem” and that she has “taken full responsibility for what she did.” He wouldn’t specify the disorder, stating: “I think it will be illuminated more during sentencing.”

“She’s heartbroken that this all happened, and having had some medical (and) psychological counseling about this, she has a better understanding of what went wrong with her life,” McCorriston said.

Simon said the honesty of bank employees is “critical to the successful operations of the business” and that Miho’s actions are “a violation of the inherent trust that’s placed into the hands of financial sector workers.”

“The temptation is high for those working in the midst of so much money, but few bankers actually take advantage of their positions to enrich themselves illegally at the expense of the bank,” he said.

Miho also served on the Hawaii Island United Way’s finance committee, according to the charitable organization’s 2010 annual report.

Email John Burnett at jburnett@hawaiitribune-herald.com.