The $602 million Alabama One Credit Union dismissed its appeal June 8 ofa cease and desist order filed by the Alabama Credit UnionAdministration.

The ACUA handed down the order in April against the Tuscaloosa,Ala.-based cooperative and a court hearing had been scheduled forJune 9.

Alabama One did not state a reason for the dismissal of itsappeal, according to court documents. The ACUA filed the orderafter finding that the credit union allegedly engaged in unsafe orunsound practices, committed fraudulent or questionable practicesand violated conditions imposed in writing by the stateadministrator.

The order required the credit union to replace its CEO, COO andchief lending officer.

It also ordered training for board members in lending,operations and compliance as well as board duties in running a safeand sound credit union and the potential liabilities for failing todo so.

Legal challenges for the cooperative, the eighth largest inAlabama by asset size, began after a federal grand jury indicted along-time member, Danny Ray Butler, in October 2013.

In its 51-count indictment, the jury charged Butler withdefrauding the Small Business Administration through a loan he hadtaken through West Alabama Bank and Trust, and kiting checksbetween West Alabama and Alabama One.

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

But the credit union's problems did not stem from the checkkiting, something that could have cost the credit union roughly$1.2 million. Alabama One has always maintained that it did notsuffer a loss from the conspiracy.

Rather, the credit union's problems began to surface as membersraised questions about the credit union's relationship with Butler,and after a succession of members began to file suit over lossesthey said they had suffered because of loans they said the creditunion had made for Butler in their names.

The cease and desist order also mandated Alabama One discontinuemember business lending, hire an outside law or auditing firm toindependently review all the credit union's loan transactions withButler, and establish a Suspicious Activity Report and CurrencyTransaction Report procedures.