B of A Workers Probed in Loss of $37 Million

Bank of America said Friday that it is investigating whether bank employees acted “improperly” in connection with a loss of about $37 million, adding that it has suspended several employees with full pay pending the outcome.

The bank issued a brief statement about the probe from its San Francisco headquarters after an inquiry by The Times, but it gave neither names nor other details.

“Very few customers were affected,” the bank said in its statement, “and the bank has had discussions with all of them.”

BankAmerica Corp., the bank’s parent company, had reported without elaboration Monday that a $37-million pretax “non-recurring” operating loss was among factors that adversely affected its fourth-quarter earnings and resulted in lower-than-expected profits.

A spokesman for the bank declined to say which area of the bank’s operations was involved or whether any law enforcement agencies have been brought into the picture.

Spokesmen for the FBI office here and the Los Angeles County district attorney said they had heard nothing of the subject.

Friday’s statement began by referring to the $37-million item and went on to say:

“We are not discussing details of where and how the loss occurred, pending our investigation of the situation. We expect that the $37 million will be sufficient to cover the operating loss incurred.

“The bank is reviewing all of the circumstances that led to this loss to determine whether any bank employees acted improperly.”

Further, the statement said the employee suspensions “do not imply any judgment by the bank as to any individual’s responsibility.”

The bank spokesman said he “could not say” if the loss involved its trust department, which makes investments as trustee for assets put under its management.

There was no indication, either, whether the operating loss involved Bank of America’s credit card center in Pasadena. As reported by The Times last November, microfilm reels containing credit records on thousands of customers were found by police in the possession of suspected swindlers and credit card forgers here and in Honolulu last fall.

In reporting results for its fourth quarter ended last Dec. 31, BankAmerica said its net profits rose to $73 million, up 39% from the same period a year ago. They would have been still higher, the company indicated, except for a 16% increase in loan-loss provisions to $299 million from $258 million and the $37-million loss.