“Humble yourselves therefore under the mighty hand of God;that He may lift you up in due time…” – 1 Peter 5:6

John Dee Carruth has called Tuscaloosa, Ala. home since thefirst grade. It's a place where the phrase “God-fearing” and churchon Sunday may be second only to Nick Saban and college football.Where “southern hospitality” and “roll tide” aren't just sayings,they're life mottos. It's also a place so steeped inentrepreneurial culture that Forbes named it No. 43 in job growthand No. 64 in best small places for businesses and careers.

It's also the place where Carruth got his start in the financialindustry.

Thenow-president/CEO of the $598 million, Tuscaloosa-based Alabama OneCredit Union started as a teller at the age of 19. Every evening,Carruth worked with his mentor, the former president of the creditunion, to learn how to make loans that would best suit credit unionmembers, he said. He was there when the credit union ultimatelygrew to become a community charter. He was there when its locationsgrew from four to 11, and when it reached 200 employees and 61,000members.

And he was there, front and center, when it all nearly cametoppling down over what he calls a mistake turned state governmentconspiracy. After years of regulatory inspections, lawsuits andmud-slinging, Carruth said he now has what he needs to prove thathe is not only innocent of fraud, but that state officialsincluding those in the Governor of Alabama's office conspiredtogether to go after credit union dollars – and he shared thatevidence with CU Times.

Humble Yourselves

What do the Bible, the Governor of Alabama, a weekly Saturdaymorning breakfast get-together, the FBI and Alabama One all have incommon? The answer, Carruth said, is in potentially hundreds ofemails sent to and from attorney Justice D. “Jay” Smyth, III. Theyincluded or discussed Smyth's friend and former law partner, who isnow the chief legal advisor for the governor of Alabama; AlabamaGovernor Robert Bentley; aides for both of those individuals; StateSen. Gerald Allen (R-Tuscaloosa), Alabama Credit UnionAdministration Administrator Sarah Moore; an FBI agent; a retiredjudge and several others.

Each email included a scripture reference from the ApostlePeter, and many included references to weekly Saturday outings.

The initial problem can be traced back as far as 2009, whenregulators began questioning business loans Alabama One made to DannyButler, a man now serving time in prison for kiting checks.

Carruth acknowledged that Alabama One exceeded the regulatorycap on the percentage of loans to a single member, and said it wasa mistake.

“Regulators felt like we had loaned too much money to one memberor one group of members,” he said. “Ultimately, we had violatedthat. We made a good-faith decision in making those loans but itappears we did exceed [the aggregate].”

While Alabama One corrected its violation, it faced fivelawsuits from members who said the credit union connected them toButler, and that they were financially harmed through straw loanschemes.

As the credit union fought those lawsuits, and after it workedto be in compliance with state and federal regulations, it receivedletters in April 2013 from the NCUA and ACUA commending thefinancial institution for getting things back on track so quickly,and complying with the letter of understanding and agreement,Carruth said.

“The regulators asked us to reduce that concentration,” he said.“In record time, we reduced the concentration and even gotcongratulatory letters.”

That's why he was surprised to look up from his office on Feb.28, 2014, to see the now-former administrator of the ACUA, LarryMorgan, and several state troopers rounding the corner, headedstraight for his office.

Carruth said, in hindsight, it all makes sense now.

Under the Mighty Hand of God

Smyth was handling all five lawsuits on behalf of membersagainst Alabama One. Carruth said Smyth and his partners pushed forthe credit union to settle, believing it wouldn't want a PRnightmare on top of its existing issues with regulators. ButAlabama One did put up a fight, Carruth said, because its boardfelt the lawsuits were frivolous and unjustified.

On Oct. 31, 2013, Smyth emailed Pam Chesnutt, executiveassistant to David Byrne, chief legal advisor for the governor. Thesubject line read, “Alabama One.” Smyth wanted to set up a meetingwith Byrne and Bentley.

“I wanted to let you know that we are trying to work out ameeting for November 7 or 8,” Chesnutt replied.

Smyth also sent an email that morning to Byrne, Judge BernardHarwood, Smyth's law firm partner Al Lewis and attorney BobbyCockrell. The email said Smyth had discussed “new facts” with ACUAgeneral counsel Mark Williams and said Williams would be availablefor a meeting, along with Morgan.

It was the first in what is now a long list of emails thatCarruth said prove Smyth, the ACUA and state officials conspiredtogether to attempt to force Alabama One to pay millions inlawsuits or face unwarranted suspensions.

In a confidential memo dated Nov. 8, 2013 from Smyth to Allen,Smyth said he reached out to FBI Special Agent William Tootle,Williams and Byrne laying out a case for significant financial lossagainst his clients due to Alabama One and what Smyth called thecredit union's “ongoing fraud.”

Throughout the dozens of emails obtained by CU Times, each oneending with a scripture and often with the friendly saying “rolltide,” Smyth emailed information about his clients to various stateand federal officials, even advising the ACUA on how to investigateAlabama One and its lawyers on what action should be taken againstthe credit union's executives.

A request to the FBI Birmingham Field Office for information onwhat action, if any, the FBI took after receiving the variousemails was not returned.

In several emails, Smyth referred to meetings with the governor,who did not return requests for comment from CU Times. Smythreferred to the governor as “no doubt wanting the ACUA to pick upwhere it left off in 2009,” and that the governor had requestedmore information on the situation.

CU Times also attempted on multiple occasions to reach Byrne andAllen.

According to the emails, Morgan began to withdraw his supportfor the investigation of Alabama One and subsequent suspension ofCarruth; in response, Smyth suggested asking Morgan to attend ameeting with the governor and urged state officials to get Morganon board.

On Nov. 19, 2013, Smyth detailed a plan to Chesnutt, in whichBentley, Harwood, Williams and Allen would attend a private meetingto “decide what actions would seem to be most appropriate for thestate of Alabama.”

In an email dated Nov. 25, 2013, Smyth thanked Byrne for making“the meeting with the governor productive.”

On Nov. 26, Smyth sent an email to Bentley and several others tothank him and said, “the substantial time and effort which yourstaff has put into the investigation and evaluation of Alabama OneCredit Union situation is quite obvious.”

According to a letter from the governor's office, Bentley laterdenied a request to meet with members of Alabama One who requesteda chance to tell their side of the story.

Carruth said state regulators did back off from the credit unionafter it made the necessary corrections, and, for a period of time,things were quiet.

He also said he didn't know what was brewing via email duringthat peaceful time.