In a June letter, Carruth's lawyer demanded that Walters make a public, full and unqualified retraction of the accusations, representation and statements posted by him and others on his Facebook page.

Carruth also demanded that Walters remove all of these statements from his Facebook site and to stop posting defamatory remarks about the CEO.

"Absent your complete and unqualified compliance with these demands, a lawsuit will follow," Carruth's lawyer, Barry V. Frederick, wrote.

Previously, Walters acknowledged that he has actively criticized credit union leadership and called for Carruth to step down as CEO; however, he denied calling Carruth a criminal and said he apologized on June 22 after receiving the letter.

"First of all I would like to make a public apology to CEO Mr. John Dee Carruth after reading the letter below from Mr. Barry Frederick Attorney At Law (who is a friend of mine)," Walters wrote in a post on his Facebook page. "He has asked me to make a public apology and I just want to say to Mr. Carruth if I called you a crook, I do not remember ever doing that. I do remember stating many times that you have not been charged with any criminal activities and you will be a friend of mine to the very end. I do sincerely apologize if I did use the word crook. This is America. I still have my first amendment right."

However, that Facebook post apparently was not an "effective and acceptable retraction" for Carruth and his attorney.

In the lawsuit, Frederick is using this Facebook post against Walters.

Frederick wrote in the lawsuit that because Walters never said Carruth had broken any law, it means that Walters knew or should have known the defamatory accusations of criminal conduct were untrue.

"Defendant (Walters) later (also after Defendant received demands for a retraction and that he cease and desist) [apologizing] to Plaintiff, one does not apologize about one's defamatory accusation unless one knew they were untrue," Frederick wrote in the lawsuit.

Since the storm of controversies surrounding Alabama One began two years ago, there have been numerous lawsuits filed by members, employees, state regulators and others claiming fraud, a hostile workplace environment, compliance and state law violations, conspiracy, breaches of fiduciary duties and the waste of corporate assets.

Moreover, in April the Alabama Credit Union Administration and the NCUA filed a cease and desist order to force the troubled credit union to replace its CEO, COO and chief lending officer.

However, last month Alabama One filed a federal lawsuit against Alabama public officials – including Sen. Gerald H. Allen (R-Ala.), Gov. Robert Bentley's chief legal advisor David Byrne and local attorneys – alleging conspiracy and abuse of power from Gov. Bentley's office.

Carruth alleged the defendants attempted to coerce tens of millions of dollars in legal settlements out of the credit union despite state and federal regulators deeming it a safe and sound institution.

The credit union stated in the suit that the public officials' abuse of power began in November 2013 and stemmed from their desire to benefit their political and personal friend, attorney Justice D. "Jay" Smyth, III, whom Alabama One states put pressure on the credit union to settle five frivolous lawsuits filed by Smyth and others affiliated with him.

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.