As late as the end of March 2014, Alabama One executives considered a wide variety of strategies to keep long-term member and convicted felon Danny Ray Butler, pictured at left, afloat financially and hide the true condition of his loans from state regulators, according to a document leaked to CU Times.

Butler pleaded guilty to a 53-count indictment in early February 2014 and went to the federal penitentiary in September 2014.

The document, written by Stephen Shaw, an attorney with the Birmingham, Ala., law firm of Redden, Mills, Clark and Shaw, discussed a meeting Shaw attended on March 31, 2014, with Alabama One's former Business Lending Manager Tammy Ewing, Alabama One CEO John Dee Carruth and Alabama One attorney Paul Toppins. According to Shaw, the three executives put the credit union's need for more information and payments from Butler solidly in the context of pleasing regulators.

"Alabama One Credit Union will need to have in the immediate future, certain information to provide to the Montgomery regulators related to your loans," Shaw wrote in the April 3, 2014 letter to Butler. "This will enable Alabama One to prove to the regulators that they are making a good faith effort to treat your loans the same as others, and that any accommodations they make to you are because of your history with the credit union and likelihood of success with the loans."

The Alabama Credit Union Administration had its headquarters in Montgomery, Ala. ACUA Administrator Sarah Moore had not yet responded to an email request for an interview as of press time.

"The regulators want to see what the workout is and if it is possible for success versus a foreclosure." Shaw added. "If not, they want to know why a foreclosure has not been initiated."

Shaw wrote that John Dee Carruth had suggested interest-only payments for a period of three consecutive months would "give the credit union something to present to the regulators." Shaw also reported that the group had suggested Butler sell some timber on some of his property.

Shaw has not yet responded to an interview request about the letter and Carruth declined to comment on it directly since he had not read it. However, he strongly denied any attempt to mislead anyone about the loans.

"I can, however, vehemently deny that neither I nor anyone else connected with Alabama One Credit Union ever attempted to mislead anyone about any loan, including those owed by Danny Butler," Carruth wrote in an email. "Our sole goal has always been to do everything within our power to get the loans repaid."

The letter reported Butler had to pay $21,507.90 by April 15, 2014, which included $8,388 on his home and $13,119 on the Water Treatment Plant in Fosters, Ala. Shaw also wrote the executives had said Alabama One would pay government environmental regulators a $6,730 permitting fee and roll the balance into the Fosters Water Treatment plant loan.

The plant could not have legally operated without the water treatment permit.

The bottom line, Shaw wrote, meant Butler would have to come up with $64,500 within the next 105 days, which represents the three months of payments and, Shaw wrote, the executives wondered if Butler had other people who might be investors.

"They suggested you consider going into partnership with someone or a business who could insert capital," Shaw wrote. "Roger Taylor's name was mentioned. Hardy McCullum was also mentioned," Shaw continued, adding: "It appears from these discussions that the credit union is willing to consider any proposal which you make to avoid a foreclosure."

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