TUSCALOOSA, Ala.—Eleven former executives with Alabama One CU here who were let go in a conservatorship have filed a lawsuit claiming they were improperly dismissed by the state regulator.
In the civil suit the 11 former employees are seeking reinstatement into their former positions and return of Alabama One’s control to the dismissed board of directors. They also are seeking monetary damages and a permanent injunction prohibiting the Alabama CU Administration (ACUA) and its administrator from committing what the plaintiffs called “further violations of the law,” according to the Tuscaloosa News.
The $598-million Alabama One has been embroiled in a high-profile dispute with both the state regulator and even state officials, including the governor, for the past several years, primarily as the result of loans made to a local developer who is now in prison as a result of fraudulent activity. The credit union has also reported more than a year of steady losses, as CUToday.info has reported here and here.
Alabama One was put into conservatorship on Aug. 27, just two days after it had filed a lawsuit against a number of powerful people in the state, and as a result the board and much of the senior management team was also released. In an unusual move, the ACUA has not named an interim CEO and is instead managing the institution itself. In putting Alabama One into conservatorship the state regulator cited the credit union’s refusal to comply with the cease-and-desist order that had been issued earlier. That order had charged Alabama One management with “willful violation of a cease-and-desist order” and “concealment of books, papers, records or assets of the credit union or refusal to submit” those items for inspection and examination by state authorities.
Alabama One lost nearly $8 million during 2014 and reported close to $4 million in losses through mid-year 2015.
The plaintiffs who have filed the civil suit against the ACUA are Tim Powell, former Alabama One chief information officer; Denise Crawford,
former controller; Martie Patton, former chief operations officer;
Edwin D. Harell, former chairman of the board; Charlie West, Darlene Wallace, A.D. Sanders, Larry Sexton, Richard Powell, Jerry Hewitt, all former board members; and David Harris, a former member of supervisory committee, according to the Tuscaloosa News.
The filing of the lawsuit for the first time reveals the names of others in senior management who had been released as part of the conservatorship. The ACUA had earlier declined to name others who were let go beyond the CEO.
Not included in that group is former CEO, John Dee Carruth, who has filed separate litigation against a number of individuals, including ACUA Administrator Sarah Moore, and Alabama Governor Robert J. Bentley. Alabama One had also been a plaintiff in the suit against the regulator prior to the conservatorship, but the ACUA has since announced that it has released the firm acting as counsel in that case. The status of that litigation remains uncertain, as the conservatorship means the state regulator is both a plaintiff and the defendant in the case.
Through his attorney, Carruth has told CUToday.info that he intends to continue to pursue the case even if the credit union is no longer a co-plaintiff.