The lawsuit 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.

Carruth's appeal was consolidated with an appeal from Tim Powell, who was chief information officer at Alabama One.

"Petitioners (Carruth and Powell) must overcome that damning reality of their own documents, which overwhelmingly demonstrate that the action undertaken by (the) ACUA was neither arbitrary (n)or capricious under Ala. 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 the Petitioners," Reynolds wrote.

In addition to Alabama One's $12.6 million in losses as of June 30, 2015, credit union members decreased their deposits by $18.8 million from April 1, 2015 to July 31, 2015, or more than $1 million per week during those four months, according to Reynolds.

"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."

In a prepared statement, Carruth said the ACUA filing exemplifies a desperate attempt by the state 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.

"To argue that a credit union with more than $50 million in reserves and a capital ratio of nearly 10% is not a safe and sound financial institution will simply not hold up under close review," Carruth said. "The ACUA has spent over $1 million in taxpayer money pursuing its private agenda against Alabama One. The ACUA refuses to acknowledge that a significant portion of the losses incurred by the credit union this year are the direct result of pointless expenditures and actions mandated by the ACUA, itself, who disregarded its own previous reviews."

He also argued that these were unnecessary and redundant directives that required Alabama One to spend millions of dollars on new reviews so that the ACUA could try to reach a specific conclusion despite its inability to do so previously.

"As we are now learning, the full story about what has been happening in Montgomery has yet to be told," Carruth said.