Morgan also said during the hearing the suspension was intended to help officials look for evidence of wrongdoing.

However, Morgan said no evidence was ever found and all suspended employees eventually returned to Alabama One.

Prior to the suspension, state regulators received emails from attorney Justice D. "Jay" Smyth III, who represents members who have sued Alabama One claiming fraud.

On Feb. 24, 2014, Smyth emailed his former legal partner David Byrne, Byrne's aide Pam Chesnutt, attorney Bernard Harwood, State Senator Gerald Allen (R-Tuscaloosa), state legislative employee Luanne Miller and deputy legal advisor Carrie McCollum with the subject line "PLEASE REVIEW RE ALABAMA ONE." Smyth wrote his concerns involved his clients, Alabama One members Jerry and Brenda Griffin, who had sued the credit union.

"If action is not taken by ACUA to stay further proceedings – so there can be a true and accurate evaluation of the extent of the fraud and what needs to be done – the Griffin's (sic) will likely be devastated by financial ruin," he wrote.

Morgan suspended Carruth and the other employees four days later.

Alabama One issued a press release shortly after the suspension order claiming Morgan had been manipulated by a trial lawyer.

Smyth denied those allegations, and wrote in his emails he felt Alabama One was waging a war against his clients.

Smyth said his contact with the ACUA was due to the fact that his clients were members of the cooperative regulated by the ACUA and, as such, had a right to expect the ACUA to properly "investigate and correct any known or suspected improper or illegal conduct which is either caused or allowed by the credit union management."

"Our clients urged the ACUA to investigate their complaints and, if the agency found Alabama One to have engaged in conduct that violated financial regulations or state law, to take prompt remedial action in connection with such findings. Members have an absolute right to make such requests to regulators," Smyth said in an email to CU Times.

While suspended, three Alabama One employees – Carruth, COO Martie Patton and Business Lending Manager Tammy Ewing – filed a civil lawsuit March 3, 2014. They sued the ACUA and Morgan, claiming they were wrongfully suspended and sought a temporary restraining order that would allow them to return to work.

On that same day, Smyth emailed Byrne, McCollum and ACUA General Counsel Mark Williams a copy of the complaint and said, "as you can see from a review for the pleading and motion (the suspended employees) are asking for extraordinary (immediate) relief from the Court…We will be watching for a strong response from the ACUA. There is more than ample evidence supporting the decision that was made in this matter."

The next day, March 4, Smyth reached out via email to ACUA outside counsel, Byrne and Williams, to say he had concluded that the only "rational and responsible course of action for (the) ACUA" to take would be to "take over" the credit union and appoint a "conservator."

Smyth had also emailed ACUA and state officials, and suggested they pass along information to Alabama One Interim CEO Doug Key, who was also president/CEO of the $133 million Mutual Savings Credit Union in Birmingham, Ala.

In the correspondence, Smyth described several things he had heard were happening at Alabama One, including that Carruth's assistant was "observed going through Tammy Ewing's office and removing certain items" and that the board members were considering "approaching Larry Morgan" regarding the interim CEO in favor of an Alabama One controller. Smyth said the candidate was "laughable."

He then suggested to officials Key secure the in-house video surveillance.

On March 5, Smyth exchanged emails with ACUA outside counsel David Martin, again asking for a conservatorship while discussing Carruth's legal fight to remove the suspension. Martin emailed Smyth to discuss the options in "the event of an adverse ruling" from the judge regarding the employees' suspensions, and said neither option would keep the suspended employees out of the credit union if the judge ruled in their favor.

"My conclusion is that if we lose the TRO (temporary restraining order), the fastest way to get the plaintiffs back out of the credit union is to do a conservatorship," Martin wrote to Smyth.

Smyth also said in his emails it was critical the ACUA attorneys keep in touch with Key, whom he said had "several years experience of dealing with both the old 'Carruth regime' and also the Carruth-employed lawyers at Burr Forman."

He then wrote he had also spoken to NCUA's Kim Paige that very morning, who was onsite at Alabama One.

On March 12, Smyth emailed Williams, Martin, Byrne, McCollum and several attorneys regarding a deposition scheduled for Morgan and a motion he wanted to squash. He also said it was "time for Mr. Doug Key to make some decisions that will have a lasting impact and that will move all this litigation into a posture for fair and reasonable resolution."

The suspensions against Carruth, Patton and Ewing were lifted March 13 after a Montgomery judge told the ACUA to state a reason for the suspensions if they were to remain in place.

Morgan resigned the following Monday.

Smyth denied any lobbying attempts for the removal of Carruth or other members of the financial institution, and further denied knowing about Carruth's suspension ahead of time or preplanning a press conference for the day of his suspension, as Carruth alleged in a phone interview with CU Times.

"We have said before, and we say again today, that no one at our firm had any so-called 'advance knowledge' that any Alabama One executives would be temporarily suspended by the ACUA," Smyth wrote. "While it is certainly true that we answered some limited media questions about allegations of misconduct and irregularities at Alabama One, we had no way of knowing what the ACUA was going to do – or not do – in regard to the credit union's management until the agency made its decision on suspensions. While we have said, on numerous occasions, that action by regulatory officials (or other persons) seems warranted by the relevant facts, we are in the same position on this subject as our clients and members of the general public. We will simply have to wait and see what happens."