A federal investigation of American Savings Bank officials concluded they were "incompetent" but their actions not criminal after their discovery of a $183,000 theft by an assistant branch manager.

"They did things to protect the bank’s reputation," said federal prosecutor William Shipley, but their actions were not illegal, he said.

Part of the reason for the government’s conclusion is that the customer from whose account the money was taken had died and could not testify whether indeed she had signed documents after the fact describing the theft as a loan and, if she had, whether it was at the bank’s urging.

Shipley also said the assistant branch manager, Marylin DeMotta, did not have the education or experience for her position and was poorly supervised, especially by her branch manager, who was running for the Legislature at the time.

He said the investigation of an alleged cover-up is the reason the government took so long to prosecute DeMotta.

The theft happened in 2004. A federal grand jury indicted her in 2007.

U.S. District Judge David Ezra sentenced DeMotta yesterday to four months in jail followed by three years of supervised release. Ezra also ordered DeMotta to perform 250 hours of community service.

Shipley did not recommend any jail time because he said DeMotta cooperated with investigators and paid back the money.

"This situation has been difficult and unfortunate for everyone involved. We hope today’s ruling brings closure, particularly for the victim’s family," the bank said in a written statement.

DeMotta pleaded guilty in April to embezzlement and theft of public money for cashing two cashier’s checks, each for $91,500, both payable to the Internal Revenue Service, that were supposed to pay the customer’s capital gains taxes. DeMotta diverted most of the money and other funds from the account, totaling $213,500, into accounts she had opened in her father’s name without his knowledge to win a bank-wide contest for her branch.

The win earned each branch employee bonuses of between $1,000 and $5,000.

The government dropped charges that she took $125,000 from the same customer’s account, put it into another account held by the customer and the customer’s son, then withdrew $110,000 from the second account to buy for herself a condominium in Waipahu.

The customer’s son, William Lim, directed DeMotta to buy the condominium for him and to put it in her name because he did not want the purchase to disqualify him from state-sponsored health care insurance, said Michael Green, DeMotta’s lawyer.

The son has not been charged with any crimes.

The customer, Ada Lim, and her son, sued the bank in state court in August 2006 over the theft and the alleged attempt to cover it up.

The bank’s former security director, Cuthbert Corniel, filed his own whistle-blower lawsuit in state court that same day, accusing American Savings of trying to discourage him from reporting DeMotta’s actions to regulators and for retaliating against him when he did.

The bank settled both lawsuits out of court.

Ada Lim died in 2008 at age 93.