Court records and sources familiar with an unfolding situation at Alabama One Credit Union said last week that the NCUSIF and NCUA may soon face the biggest regulatory failure since the corporate credit union meltdown in 2008 and 2009.

Legal challenges for the Tuscaloosa-based, $603 million dollar cooperative, the eighth largest in Alabama by asset size, began after a federal grand jury indicted a long-time member, Danny Ray Butler, in October 2013. In its 51-count indictment, the jury charged Butler with defrauding the Small Business Administration through a loan he had taken through West Alabama Bank and Trust, and kiting checks between West Alabama and Alabama One.

Butler pleaded guilty in February 2014 and went to federal prison in Talladega, Ala., in September 2014.

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