MONTGOMERY, Ala.–Just two days after adding the state’s governor to a lawsuit it had filed alleging illegal and coercive activities at the highest levels of state government, the Alabama Credit Union Administration has placed Alabama One Credit Union into conservatorship.
The state regulator, against which the $598-million credit union has also made numerous allegations, did not provide a reason for conserving the credit union, which took place after business hours on Thursday. Typically, when CUs are placed into conservatorship, it takes place on a Friday, giving the regulator a weekend to take over the operations.
The situation at Alabama One Credit Union has been a messy one over the past two years, with financial losses, accusations of insider pressures on state regulators, a $25-million loan deal that went south and resulted in the borrower being convicted of crimes and going to prison, and even a former member of the board of directors filing a lawsuit that sought to have the management ousted, as is reported here.
According to its June 5300 report filed with NCUA, Tuscaloosa-based Alabama One posted a $3.188-million loss for the second quarter, and a $1.947-million loss during the first quarter. It also reported $7.8-million in losses for 2014.
Alabama One and the Alabama CU Administration have been at loggerheads for some time. In April, the regulator ordered it via a cease-and-desist letter to replace CEO John Dee Carruth, its COO, and its chief lending officer, and also ordered the board to undergo training related to conflicts of interest. CUToday.info’s full story on that order can be found here.
The credit union filed a lawsuit to stop the cease and desist order, with an attorney representing Alabama One telling local media that the actions being taken by the state regulator were “unwarranted.” The attorney, Paul Toppins, told the Tuscaloosa News that a “small group of attorneys” had lobbied the ACUA to take action against Alabama One and that the credit union had learned of “secret meetings” with regulators and others. The Tuscaloosa News further quoted Toppins as saying that after the CU won a court decision requiring those lawyers to turn over 100-plus e-mails, the lawyers appealed to the state Supreme Court as part of an effort to “delay the full exposure of their campaign to manufacture a regulatory situation at the credit union.”
In May, a judge denied Alabama One’s attempt to get a temporary restraining order against the state regulator.
Those e-mails are part of the lawsuit the CU has filed against the governor and other high-ranking officials. Details on that story are here.
Some of the credit union’s losses, as well as the litigation it has filed, are related to a high-profile case here involving Danny Ray Butler, a former Tuscaloosa used car dealer and real estate developer who is currently serving a federal sentence for fraud, and who at one time had as much as $25 million in loans from the credit union. Butler has since also filed for bankruptcy.
The credit union has 60,000 members. In a statement to the media, the Alabama CU Administration emphasized there will be no interruption to member services.