In the months before the Danny Butler check kite became public, a Butler employee said he personally delivered checks worth hundreds of thousands of dollars to executives at Alabama One Credit Union and West Alabama Bank and Trust.

Sammy Colburn, a 15-year employee of Butler's, detailed for CU Times how his work for Butler's used car firm, Butler Wholesale, required moving cars, running errands for parts and making deliveries.

And, about mid-way through 2011, Colburn began delivering checks to executives at Alabama One and West Alabama Bank and Trust.

“Mostly it was moving cars and the like, you know, from lot to lot and then taking checks to the credit union or the bank,” Colburn explained.

Alabama One CEO John Dee Carruth firmly denied Alabama One did anything wrong or improper in regard to the checks.

“The credit union has no knowledge of nor have there been any allegations of checks being improperly handled,” Carruth wrote in email. “The credit union denies any implications otherwise and questions whether your source may have an ulterior motive.”

Colburn’s wife Tommie was the first Alabama One member to sue in November 2013 over $22,000 that she and Sammy complained the credit union advanced to Butler out of a home equity line of credit the couple had been planning to use for their son’s university tuition. The Colburns and the credit union settled the lawsuit confidentially in September 2014, but the case became public as part of an unrelated bankruptcy proceeding involving another Butler property.

Read more: Colburn details the after-hours deposits ...

According to Colburn, the runs to the credit union and bank took place at any time of day, including after hours to the credit union, and required him to either give the checks directly to Alabama One’s then Member Business Lending Manager Tammy Ewing or drop them off with Charles “Tab” Swann’s secretary Sharon Henegar at West Alabama.

Colburn said Swann then served as senior vice president at West Alabama. He now serves as City President for Tuscaloosa at the bank.

Colburn said Butler told him to deliver the checks in this manner and not to use the regular teller lines or other depository channels. Butler also did not tell him to get receipts for the checks, nor did Ewing or Henegar offer any.

When delivering the checks to Alabama One after-hours, Colburn explained he would pull up to the credit union's main office and tap at a certain window to let Ewing know it was time to come out and get the checks. Sometimes Ewing had him come to the door, which Ewing would unlock so he could come inside, Colburn said.

Colburn said he never had to deliver checks after-hours to West Alabama Bank or ever saw the inside of Swann’s office.

Colburn recounted that Butler did not put the checks in envelopes or include deposit slips. He paper-clipped the checks together, usually in groups of between six and 10 checks, Colburn said. He added the amounts of the checks varied between $150,000 and $550,000.

West Alabama Bank revealed and stopped the check kite in February 2012. A federal grand jury indicted Butler for the swindle in October 2013 and the indictment charged that the check kite began in May 2011.

Butler pleaded guilty to six counts from the 51-count indictment in February 2014 as part of a plea agreement with the U.S. Attorney. Three counts related to the check kiting between accounts at Alabama One and West Alabama Bank and Trust, and three counts related to defrauding the Small Business Administration and another used auto firm.

The U.S. Attorney dismissed the other 45 counts.

Alabama One has also faced seven complaints so far, some of which have been settled, from members who stated Alabama One involved them in straw loans to Butler.

West Alabama's lawyer, Robert Reynolds, a member of the Tuscaloosa, Ala., firm of Reynolds, Reynolds and Little and who is also outside counsel to the Alabama Credit Union Administration, wrote in an email that he would not be able to comment for the story until April 27.

“I have reached out to my clients for further response,” Reynolds wrote. “They will need to retrieve files from storage. I will be in a mediation all day tomorrow, in meetings most of Thursday and out of the office Friday. I should be able to respond by Monday.”

Another Reynolds, Reynolds and Little lawyer, Gilbert Steindorff, did not return an email seeking a comment for the story. Steindorff also represents the Alabama Credit Union Administration.

The court sentenced Butler to 36 months in federal prison, but his fiancée, Paige Howard, has told a federal bankruptcy court that the Bureau of Prisons may release Butler in December 2015 after only 16 months of his sentence. A grand jury has not yet indicted anyone else in the case.

Instant Insights /

Butler Employee Details Alabama One Check Deliveries

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