Butler, who was indicted on bank fraud charges and a check-kiting scheme that caused Alabama One to lose about $1.275 million, signed a plea agreement Feb. 27, according to the U.S. Attorney's Office.

"The plea agreement does not accuse Alabama One of doing anything improper," Carruth explained. "To the contrary, it simply says that the credit union was the victim of a check kiting scheme and is owed restitution."

Paul Toppins, an attorney representing Alabama One, said Butler's plea agreement has created some confusion among the general public.

"Whenever a story mentions that Butler entered a plea agreement dealing with bank fraud charges, the assumption is the fraud was at the credit union, which is not factual," Toppins said.

"Danny Butler signed a plea agreement with three components," he explained. "One was the check kiting that resulted in an initial loss to the credit union (but the loss was later covered by Griffin as Butler's partner). Another was some irregularity in Butler's floor plan financing of his car sales. This had nothing to do with the credit union as his for plan financing was done elsewhere. The final component was fraud in a loan from the Small Business Administration. This loan likewise had nothing to do with Alabama One because the loan on the grocery store was with West Alabama Bank."

The day after Butler signed the plea agreement, Carruth and three other Alabama One employees were suspended by the Alabama Credit Union Administration. The suspensions were lifted March 13 after a Montgomery, Ala., judge required the ACUA to state a reason for the suspensions if they were to remain in place.

"To be suspended without being told what I was supposed to have done, and then to discover that the action by the state was taken as a result of improper pressure by a group of trial lawyers who were trying to get money from the credit union that their clients were not entitled to, made it even worse," Carruth said. "It has been a shock."

Read More: Carruth addresses lawsuit filed by member … 

Larry Morgan, the ACUA administrator who issued and lifted the suspensions, resigned March 24. Earlier this week, Morgan told CU Times his decision was based on several factors, including the desire to spend more time with family and the amount of time required to handle complicated issues like lawsuits involving Alabama One.

Lloyd Moore, deputy administrator of the ACUA, was appointed interim director of the state agency, according to a spokesperson for Alabama Gov. Robert Bentley.

Before resigning from the ACUA, Morgan lifted all restrictions against Carruth and his three co-workers: Chief Operating Officer Martie Patton, Business Lending Manager Tammy Ewing and Teller Celina Hood.

Carruth and attorneys representing Alabama One claim Morgan suspended the employees because he was manipulated by trial lawyers, including Justice "Jay" Smyth of Tuscaloosa.

"The state regulator acted based on pressure from somebody," Carruth said. "The state did not act based on an investigation or any facts. That is a scary thought for any credit union manager. We may not like everything that a regulator does, but we expect them to be fair and resist outside pressure."

Smyth, who has denied the allegations, represents several Alabama One members, including businessman Jerry Griffin, who claims he was bilked into loaning money to Butler.

"If the folks at Alabama One had spent as much time investigating the 'Danny Butler problems' at the credit union, as they have in trying to assign fictitious blame to people other than themselves, they might have a better situation today than they do," Smyth said.

In response, Carruth said, "Jerry Griffin has made a lot of claims against this credit union about how he was mistreated but he never tells you that he had his own lawyer representing him for some of his transactions with the credit union If he was mistreated in those transactions, then he has a malpractice claim against his own lawyer."

"The truth is, he was not treated unfairly or defrauded," Carruth continued. "The truth is that he is unhappy about his own decision to go into business with his long-time friend and that he overextended himself by trying to create a brand new business from scratch and ran out of money. He is simply looking to blame the credit union so it can be forced to bail him out for his own mistakes."

When asked if the investigations have damaged the credit union's reputation, Carruth replied:

"It is inevitable that any allegations, even if false, can affect a credit union's reputation. Fortunately, for this credit union, we are well know in the community and many of our members have been dealing with us for years and years. They know the truth about the kind of institution we are and we are blessed that they have faith in and trust us. It is our goal every day to be worthy of their trust."

Carruth said Alabama One is doing business as usual.

"There is a reason why this credit union is as strong and as successful as it is," he added. "Our capital is excellent. We exceed peer in almost every category. The one category where we are below peer, delinquencies, is primarily due to Jerry Griffin and his decision to stop paying his debts. He stopped paying his debts when he decided to sue us. We expect delinquencies to improve when we are given permission by the bankruptcy court to foreclose and sell the collateral securing Griffin's debts."

Carruth said Alabama One's board has closely monitored the situation.

"I have the good fortune to have a board of directors that is very involved in all of the operations of the credit union," he added. "The experience of the past few weeks has been a shock to them as well, but they have been unanimous in supporting the credit union and working to get the true story of the false accusations and unwarranted actions made known. They have asked to be kept updated on an almost daily basis and have met numerous times to make decisions and direct the credit union's response to the action by the state."

Alabama One members were reportedly prevented from asking questions during the credit union's annual meeting on March 22, which was overseen by Carruth.

"Following a motion made by a member of one of the law firms representing Alabama One, the traditional Q&A segment was removed from the agenda without advance notice to the members," Smyth stated in an email earlier this week to CU Times.

Carruth confirmed that no questions were taken from the audience, but contends the credit union did not violate any rules. He said about 1200 members attended the meeting.

"We get about that many people every year and the credit union followed the procedure that it always follows," he said. "It appeared that allies of the plaintiffs were trying to use the annual meeting for an improper purpose and to score points that they thought might increase pressure on the credit union to pay the plaintiffs money. An overwhelming vote of the members present rejected that attempt. Members have numerous opportunities to give the credit union feedback and express their concerns. Anyone complaining knows that."