Lawyers are seeking court-ordered subpoenas to obtain documents that they said can prove the conservatorship of Alabama One Credit Union was the result of a political agenda.

The plaintiffs claim the pressure came directly from Alabama Gov. Robert Bentley, his legal adviser David Byrne and Rebekah Caldwell Mason, a top political aide with whom Bentley is alleged to have had an inappropriate relationship.

Alabama One was conserved by the Alabama Credit Union Administration in August 2015, and former Alabama One President/CEO John Dee Carruth and other former credit union employees and board members were dismissed. They are suing the ACUA.

After the Tuscaloosa, Ala.-based credit union was conserved in August 2015, it took until the end of the first week of October before the dismissed employees and board members were informed of the alleged grounds for the ACUA's action, said Paul Toppins, one of the lawyers representing Carruth and other credit union employees and board members.

“At that time, the details and grounds were cloaked in a protective order that prevents any petitioner from responding publicly to them,” Toppins said. “All we can say is that we expect to show they are trumped up, erroneous and completely without merit. The position of the petitioners is that the conservation of Alabama One Credit Union was driven by an agenda that had little or nothing to do with proper regulatory concerns.”

Earlier this month, Toppins and lawyers James D. Turner and Jeven R. Sloan filed court documents in Tuscaloosa County Circuit Court requesting the subpoenas and depositions of Bentley, Mason and Byrne.

“As has been reported, others are now stating that the governor and his form top aide, Rebekah Caldwell Mason, with whom he was engaging in an inappropriate relationship, directed other agencies of state government to attempt to punish persons whom these two considered to be opponents of the governor,” Carruth’s lawyers wrote in court documents.

The governor’s relationship with Mason captured national media headlines. Although he denied having an affair with Mason, he admitted to making inappropriate remarks, according to the Associated Press. On Thursday, Alabama lawmakers indicated they are proceeding with articles of impeachment against the governor, charging that he “overstepped his bounds and needs to be removed from office,” the Associated Press reported.

Lawyers for Carruth and the other credit union employees and board members also stated in court documents there have been press reports stating anyone might obtain an audience with the governor or favorable treatment from him if they made a contribution to his 501(c) (4) “Dark Money” entity, the Alabama Council for Excellent Government (ACEGOV).

“The governor and Mason have admitted that she was paid through ACEGOV,” the lawyers wrote in court documents. “Obviously, the petitioners (Carruth and other former credit union employees and board members) should be entitled to explore these claims, especially in light of the sworn testimony of Morgan and Moore.”

Former ACUA Administrator Larry Morgan has testified on two occasions that he was told directly by Bentley and Byrne to either suspend certain Alabama One employees or resign from his position as the state’s chief banking regulator, even though Morgan unsuccessfully argued he had no basis to suspend the credit union employees.

Sarah Moore, who succeeded Morgan as the state’s bank regulator, also testified that despite the suspensions being reversed by a court order, Bentley continued with his efforts to punish the credit union when she was appointed by him by labeling it a “problem credit union.”

“Moore took the unprecedented step of intensifying the regulatory actions against the credit union before she had any basis to do so,” the lawyers wrote in court documents. “In light of recent revelations, these facts support a conclusion that the management, employees and board members of the credit union were in for retaliatory treatment at the insistence of Gov. Bentley.”

A lawyer for Bentley and Byrne objected to the subpoenas because he said they seek improper discovery of documents that are unduly burdensome and patently irrelevant.

Attorney John C. Nieman, Jr. argued that neither Bentley nor Bryne have any authority to place a credit union into conservatorship and that the subpoenas would be improper because they would violate a previous court order as well as seek information subject to the executive and deliberative process privilege.

Nieman also wrote in court documents there is no factual basis to assert that Bentley or Byrne were involved in the ACUA’s decision to issue the conservatorship. He pointed out that Moore also testified that neither Bentley nor Byrne gave her instructions on how they wanted her to handle Alabama One.

Robert D. Segal, a lawyer representing Mason, also objected to the subpoenas and depositions because of the executive and deliberative process privilege.

In addition, Mason opposed the subpoenas and depositions because she had no involvement in the case and said deposing her would be harassing and abusive.

This court battle stems from Carruth’s appeal in September 2015, which demanded the Alabama regulator show cause as to why the ACUA should not relinquish control of the credit union and its assets.

The former CEO claimed in his lawsuit that the ACUA’s decision to conserve the credit union on Aug. 27, 2015 was “unreasonable, arbitrary and motivated by ill will,” and was not supported by any substantial evidence.

In his lawsuit, Carruth asked the court to return the cooperative to the possession and control of Alabama One’s board of directors, and reinstate the board and all other employees who were terminated upon its conservatorship. Carruth’s appeal also requested court-determined monetary damages “as a result of the ongoing harm and losses sustained by the credit union during the period of the 2013 suspensions through the present as a result of the ACUA’s control and conduct.”

In response to Carruth’s lawsuit, Robert P. Reynolds, Alabama’s deputy attorney general, wrote in court papers that the ACUA will prove that a myriad of violations were committed with the most irrefutable of evidence: Alabama One’s own documents.

Reynolds said the credit union’s documents overwhelmingly demonstrated that the action undertaken by the ACUA was neither arbitrary nor capricious under state code and was in fact taken to preserve the best interest of Alabama One’s members and prevent further mismanagement and dissipation of member funds by Carruth.

“Contrary to Carruth’s assertions, Alabama One was not strong at the time of conservatorship,” Reynolds wrote. “Carruth’s insistence that Alabama One was strong only demonstrates his failure to appreciate the actual condition of his own credit union.”

Carruth countered that the ACUA was making a desperate attempt to justify its illegal and improper seizure of Alabama One, and the removal of the management team and board that led the credit union through its most prosperous years.

Alabama One posted a net income loss of $7.8 million in 2014 and $8 million in 2015, according to NCUA financial performance reports.

At the end of the first quarter of this year, the credit union recorded a net gain of $449,768 and a net worth of 9.17%, according to NCUA financial performance reports.

Instant Insights /

Alabama One Lawyers: Docs Will Prove Governor&rsquo;s Agenda

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Alabama One Lawyers: Docs Will Prove Governor’s Agenda