HILO » The state has agreed to pay an undisclosed amount to settle a lawsuit filed by more than 100 former customers of Memorial Mortuary who failed to receive services because mortuary officials stole from a trust fund, the plaintiffs' attorney said yesterday.

The state was a defendant because the Department of Commerce and Consumer Affairs allegedly knew about the company's financial difficulties in the 1990s but failed to seek legal action by the state attorney general.

The settlement amount is being withheld by agreement of the parties, but it must be disclosed when the state goes to the Legislature seeking funding to pay it, said Honolulu attorney Michael Green, who represents the customers.

Former Memorial owners Robert Diego, his wife Momi and his daughter Bobbie Jean were named as defendants when Green filed the suit in Honolulu Circuit Court in 2004.

Green said he recently obtained a judgment of $8.1 million against the Diegos when they failed to appear in court to answer the accusations.

The Diegos could not be reached for comment, but they are believed to have little money. Robert Diego was last known to be working as a maintenance man at a building supplies store.

Green was confident he would get some money anyway. “;I'll find something, believe me,”; he said.

The Diego family members were criminally charged in 2003 with stealing $500,000 from a trust fund that was supposed to pay for funeral services, which customers prepaid. The theft allegedly went on between 1989 and 2002.

In 2004, Robert Diego was sentenced to two months in jail. All three family members were placed on probation for five years and they agreed to repay a total of $150,000. However, each was allowed to pay just $100 a month, meaning they would need about 42 years to pay the full amount.

The family said then that an affiliated company, West Hawaii Mortuary, was continuing to fulfill burial contracts, but state records show that company was involuntarily dissolved.