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Alabama One Drops Cease and Desist Appeal.

Byline: Peter Strozniak

The $602 million Alabama One Credit Union dismissed its appeal Monday of a cease and desist order filed by the Alabama Credit Union Administration.

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

Alabama One did not state a reason for the dismissal of its appeal, according to court documents. (Click here to view the Notice of Dismissal)

The ACUA filed the order after finding that the credit union allegedly engaged in unsafe or unsound practices, committed fraudulent or questionable practices and violated conditions imposed in writing by the state administrator.

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

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

Legal challenges for the 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.

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

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

The cease and desist order also mandated Alabama One discontinue member business lending, hire an outside law or auditing firm to independently review all the credit union's loan transactions with Butler and establish a Suspicious Activity Report and Currency Transaction Report procedures.

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Publication:Credit Union Times
Geographic Code:1U6AL
Date:Jun 8, 2015
Words:370
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