Following years of regulatory inspections, allegations of fraudand lawsuits, John Dee Carruth, president/CEO of the $598 million,Tuscaloosa, Ala.-based Alabama One Credit Union, said he has proofof a state government conspiracy against him, several of hiscolleagues and his financial institution.

Carruth shared dozens of emails, depositions and other documentswith CU Times, which he said is evidence that attorneyJustice D. “Jay” Smyth, III conspired with his political friends toforce Alabama One to settle lawsuits for millions of dollars.

Smyth has denied these allegations, and drama could ensue in alengthy court battle.

Email exchanges discussed or took place between Smyth's friendand former law partner David Byrne, who is now the chief legaladvisor for the governor of Alabama; Alabama Governor RobertBentley; aides for both of them; State Sen. Gerald Allen(R-Tuscaloosa); Alabama Credit Union Administration AdministratorSarah Moore; an FBI agent; a retired judge and several others.

Cast Your Care on Him

Larry Morgan, former administrator of the Alabama Credit UnionAdministration, said he did not write the Feb. 28, 2014 suspensionletter that temporarily removed Alabama One CEO John Dee Carruthand others from the $600 million credit union.

Morgan made the statement during a deposition hearing on June 2,2015, related to a cease and desist that was issued by ACUA againstAlabama One in April 2015.

Morgan would not say who wrote the letter, citing advice fromhis lawyer for his decision.

In the suspension letter, Morgan cited his reason for thesuspension as, “Information regarding alleged, improper officerconduct at Alabama One has come to the attention of the ACUA. Suchinformation includes allegations of officer participation in fraudupon credit union member or members; inappropriate communication oftrial balance/account ledger information to an Alabama One customernow indicted on charges that include check kiting; documentforgeries; theft or misappropriation of customer finds; and,failure to file SARS with FinCen (Department of the Treasury).”

Morgan also said during the hearing the suspension was intendedto help officials look for evidence of wrongdoing.

However, Morgan said no evidence was ever found and allsuspended employees eventually returned to Alabama One.

Prior to the suspension, state regulators received emails fromattorney Justice D. “Jay” Smyth III, who represents members whohave sued Alabama One claiming fraud.

On Feb. 24, 2014, Smyth emailed his former legal partner DavidByrne, Byrne's aide Pam Chesnutt, attorney Bernard Harwood, StateSenator Gerald Allen (R-Tuscaloosa), state legislative employeeLuanne Miller and deputy legal advisor Carrie McCollum with thesubject line “PLEASE REVIEW RE ALABAMA ONE.” Smyth wrote hisconcerns involved his clients, Alabama One members Jerry and BrendaGriffin, who had sued the credit union.

“If action is not taken by ACUA to stay further proceedings – sothere can be a true and accurate evaluation of the extent of thefraud and what needs to be done – the Griffin's (sic) will likelybe devastated by financial ruin,” he wrote.

Morgan suspended Carruth and the other employees four dayslater.

He Careth For You

Alabama One issued a press release shortly after the suspensionorder claiming Morgan had been manipulated by a trial lawyer.

Smyth denied those allegations, and wrote in his emails he feltAlabama One was waging a war against his clients.

Smyth said his contact with the ACUA was due to the fact thathis clients were members of the cooperative regulated by the ACUAand, as such, had a right to expect the ACUA to properly“investigate and correct any known or suspected improper or illegalconduct which is either caused or allowed by the credit unionmanagement.”

“Our clients urged the ACUA to investigate their complaints and,if the agency found Alabama One to have engaged in conduct thatviolated financial regulations or state law, to take promptremedial action in connection with such findings. Members have anabsolute right to make such requests to regulators,” Smyth said inan email to CU Times.

While suspended, three Alabama One employees – Carruth, COOMartie Patton and Business Lending Manager Tammy Ewing – filed acivil lawsuit March 3, 2014. They sued the ACUA and Morgan,claiming they were wrongfully suspended and sought a temporaryrestraining order that would allow them to return to work.

On that same day, Smyth emailed Byrne, McCollum and ACUA GeneralCounsel Mark Williams a copy of the complaint and said, “as you cansee from a review for the pleading and motion (the suspendedemployees) are asking for extraordinary (immediate) relief from theCourt…We will be watching for a strong response from the ACUA.There is more than ample evidence supporting the decision that wasmade in this matter.”

The next day, March 4, Smyth reached out via email to ACUAoutside counsel, Byrne and Williams, to say he had concluded thatthe only “rational and responsible course of action for (the) ACUA”to take would be to “take over” the credit union and appoint a“conservator.”

Smyth had also emailed ACUA and state officials, and suggestedthey pass along information to Alabama One Interim CEO Doug Key,who was also president/CEO of the $133 million Mutual SavingsCredit Union in Birmingham, Ala.

In the correspondence, Smyth described several things he hadheard were happening at Alabama One, including that Carruth'sassistant was “observed going through Tammy Ewing's office andremoving certain items” and that the board members were considering“approaching Larry Morgan” regarding the interim CEO in favor of anAlabama One controller. Smyth said the candidate was“laughable.”

He then suggested to officials Key secure the in-house videosurveillance.

On March 5, Smyth exchanged emails with ACUA outside counselDavid Martin, again asking for a conservatorship while discussingCarruth's legal fight to remove the suspension. Martin emailedSmyth to discuss the options in “the event of an adverse ruling”from the judge regarding the employees' suspensions, and saidneither option would keep the suspended employees out of the creditunion if the judge ruled in their favor.

“My conclusion is that if we lose the TRO (temporary restrainingorder), the fastest way to get the plaintiffs back out of thecredit union is to do a conservatorship,” Martin wrote toSmyth.

Smyth also said in his emails it was critical the ACUA attorneyskeep in touch with Key, whom he said had “several years experienceof dealing with both the old 'Carruth regime' and also theCarruth-employed lawyers at Burr Forman.”

He then wrote he had also spoken to NCUA's Kim Paige that verymorning, who was onsite at Alabama One.

On March 12, Smyth emailed Williams, Martin, Byrne, McCollum andseveral attorneys regarding a deposition scheduled for Morgan and amotion he wanted to squash. He also said it was “time for Mr. DougKey to make some decisions that will have a lasting impact and thatwill move all this litigation into a posture for fair andreasonable resolution.”

The suspensions against Carruth, Patton and Ewing were liftedMarch 13 after a Montgomery judge told the ACUA to state a reasonfor the suspensions if they were to remain in place.

Morgan resigned the following Monday.

Smyth denied any lobbying attempts for the removal of Carruth orother members of the financial institution, and further deniedknowing about Carruth's suspension ahead of time or preplanning apress conference for the day of his suspension, as Carruth allegedin a phone interview with CU Times.

“We have said before, and we say again today, that no one at ourfirm had any so-called 'advance knowledge' that any Alabama Oneexecutives would be temporarily suspended by the ACUA,” Smythwrote. “While it is certainly true that we answered some limitedmedia questions about allegations of misconduct and irregularitiesat Alabama One, we had no way of knowing what the ACUA was going todo – or not do – in regard to the credit union's management untilthe agency made its decision on suspensions. While we have said, onnumerous occasions, that action by regulatory officials (or otherpersons) seems warranted by the relevant facts, we are in the sameposition on this subject as our clients and members of the generalpublic. We will simply have to wait and see what happens.”

What Smyth's emails are missing are the final sentence of thatscripture: “Casting all your care upon Him, for He careth foryou.”

That verse may be more important for Carruth, as he continues tobattle multiple lawsuits, this time against those he said haveharmed him.

“It finally made sense,” he said after seeing the emails. “Itfell into place what we've been going through.”

But Carruth said he hasn't lost faith in the community.

“I'm not going to let a handful of people change that,” he said.“The participants in this don't appear to be good people. Theydon't appear to have good motives and that's clear from theseemails.”