Not long after Alabama One Credit Union was released from conservatorship following a return to profitability, the credit union's former CEO fired back at the Alabama Credit Union Administration, criticizing the regulator and calling the conservatorship process meaningless.

“The ACUA cannot ‘return’ that which it never legally ‘possessed,’” ousted CEO John Dee Carruth said in a statement to the press. “For almost 17 months, I and the other employees -- along with the board of directors and supervisory committee -- dismissed from Alabama One by the ACUA have sought to have our statutorily granted day in court, and we are still waiting for that day to happen.”

Carruth was removed from his office by the ACUA and has been embroiled in a lengthy legal case against the regulator, including Carruth questioning the legitimacy of ACUA Administrator and Chairman Sarah Moore. In turn, the regulator had accused the former leadership at Alabama One of financial mismanagement and other improprieties, including making questionable loans to a local businessman named Danny Ray Butler, who received a federal prison sentence for fraud.

Characterizing the ACUA’s takeover of Alabama One as “unlawful,” Carruth noted that his suit against the regulator has “never been reviewed by a court,” despite his side filing an appeal of the conservatorship in September 2015.

“We are confident that when that occurs, the false and fraudulent basis for the conservatorship will be exposed,” Carruth added.

In a direct attack on Moore, he declared that the “only thing Mrs. Moore has accomplished as the acting conservator of Alabama One is squandering millions of dollars of credit union resources in pursuing her personal interest in keeping control of Alabama One long after she knew these actions were not justified. This fight is long from over.”

Former CEO of Alabama One Credit Union
John Dee Carruth
Former CEO of Alabama One Credit Union

'No basis for appeal'
The former CEO may not get that chance, however. By Alabama law, said Moore, terminated officials can appeal a conservatorship, but the remedy to those appeals is that conservatorships are ended.

"He has no basis for an appeal because the conservatorship is over," she told CU Journal.

According to ACUA counsel Robert P. Reynolds, “As usual, Mr. Carruth’s statements are without foundation and unsupported. The ACUA has been ready to defend the conservatorship within days of the filing of the appeal.”

Reynolds added that “it is Mr. Carruth who has continued to delay the proceedings, not the ACUA. Further, the ACUA board and administrator have been extremely pleased with the significant improvement at Alabama One since the conservatorship, as set forth in the resolution adopted by the ACUA board commending the new management, board and members for the successful turn-around of the credit union.”

Alabama One finished 2016 with a positive net income, according to its Q4 2016 call report, but its revenues fluctuated significantly during the year. While it posted a loss of more than $8 million in 2015, it began 2016 with a gain of nearly a half-million dollars in Q1, followed by declining revenues that resulted in a half-million dollar loss by the end of Q3. By year-end, the credit union was back in the black at $70,861.

According to Moore, those swings between positive and negative net income were largely tied to dispossession of assets, bad loans and disposal of a large foreclosed property. Troubled debts, loans delinquent by 60 days or more, and repossessions all decreased by more than 40% during conservatorship, she said, and the regulator believes the credit union is trending positively and will continue to post net income gains.

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