Newspaper article The Tuscaloosa News

Credit Union Regulators Slam Alabama One

Newspaper article The Tuscaloosa News

Credit Union Regulators Slam Alabama One

Article excerpt

State regulators have ordered major changes at Alabama One Credit Union, slamming the Tuscaloosa-based credit union's lending practices, its management and its board of directors.

The Alabama Credit Union Administration, a state agency that regulates state-chartered credit unions, said Alabama One's officers, directors, committee members or employees "have engaged in unsafe or unsound practices and violations of law, rule or regulation, have committed fraudulent or questionable practices in the conduct of the credit union's business and have violated conditions duly imposed in writing by the (ACUA) administrator."

The agency issued a cease-and-desist order, demanding that the credit union make major changes in its management, training of its directors and lending practices, including its business loans. The order was issued to the credit union on April 2 and made public by the state agency on Friday.

In the order, the ACUA also required Alabama One to "engage an independent third party to conduct a comprehensive loan review of all loan transactions involving Danny Ray Butler, including but not limited to any alleged 'straw buyer or borrower' transactions involving Mr. Butler."

Butler, who once owned a Tuscaloosa used car dealership, had a number of other business ventures in Tuscaloosa County and in 2012 had almost $25 million in loans from Alabama One to finance those ventures. Butler is now serving 36-month prison sentence at the Talladega Federal Correctional Institution for check kiting and defrauding lenders out of $3 million. He also has filed for bankruptcy.

The ACUA also ordered Alabama One to "recruit and retain qualified management with the qualifications and experience commensurate with assigned duties and responsibilities at the credit union. The order specifically mentions the positions of chief executive officer, senior lending officer and chief operating officer.

It did not say the people now holding those positions should be fired.

In an email response to The Tuscaloosa News, Alabama One's in- house attorney Paul Toppins said, "there have been no changes in management or the board of directors at Alabama One as a result of the order, and no changes are contemplated by the credit union."

The statement noted that John Dee Carruth remains Alabama One's manager and CEO.

Toppins also sent a copy of a lawsuit filed by Alabama One against Sarah Moore, the ACUA administrator. The suit, filed in Tuscaloosa County Circuit Court on Friday afternoon, asks the court to void Moore's actions as head of the ACUA because there is no record of her being sworn in as the administrator or of her posting a required $25,000 bond for holding that post. …

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