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

Morgan was then replaced by Moore, and Carruth alleged in his complaint that Moore received the position because of her friendship with the governor's chief legal advisor, David Byrne. His complaint alleges Moore did not have the expertise, experience or background to otherwise take the position.

Moore previously served as executive vice president and CFO for the failed Colonial Bank in Montgomery, Ala. and Colonial BancGroup. When Colonial Bank failed in 2009, it was the sixth-largest U.S. bank failure and the largest in Alabama's history, according to national media reports.

"What she did possess, however, was a close friendship with Byrne and the willingness to faithfully follow and execute any and all instructions from the Governor's office," the complaint read. "Moore's reign at the ACUA has been one of unrelenting escalation of regulatory overreach targeting Alabama One."

The complaint continued to allege that Moore's regulatory enforcement actions, which included a preliminary warning letter, letter of understanding agreement and ACUA-issued cease and desist order, were unwarranted. Alabama One's major concern, the credit union said, is that the ACUA has "threatened to place Alabama One into conservatorship" and that a new CEO and board of directors would be hand-picked by Bentley and "Smyth-friendly."

According to transcripts from Moore's June 2, 2015 deposition related to a cease and desist issued against Alabama One, she received a bachelor of science in business administration and accounting, and later became a certified public accountant. From 1987 to 1996, she worked as an auditor for financial institutions. She then began at Colonial Bank, where she served as a senior vice president responsible for strategic planning, budgeting, acquisition integration, acquisition due diligence and pricing, prior to being promoted to the bank's treasurer and eventually executive vice president and chief financial officer.

Moore said she was friends with Byrne when he served as general counsel at Colonial BancGroup and Colonial Bank, and that he called her when the ACUA position became open, according to the deposition. She said during the interview process, she was told that there was a "large problem" at Alabama One, but that no one told her specifically how they wanted her to handle that problem. She said she never spoke with Bentley, Morgan or Smyth regarding what actions should be taken at the credit union.

In the deposition, Moore testified that she had seen an April 2013 letter from the ACUA to Alabama One that said, in part, "I congratulate you and your Board of Directors on the progress you have made to correct noted concerns. As a result, I am removing your LUA; however, the moratorium on member business lending remains in effect." Moore said that the credit union's previous letter of understanding and agreement, based on the examination she conducted there in the summer of 2014, did not adequately address the concerns at Alabama One, and that the 2014 exam exposed many issues that were previously not identified.

According to a preliminary warning letter to the credit union drafted by the ACUA on Aug. 20, 2014, Alabama One had failed to "correct current unsafe and unsound conditions in relation to member business lending practices noted in past contracts." The ACUA denied the credit union's request for a proposed settlement agreement with Smyth's clients, who included members Brenda and Jerry Griffin, and denied authorizing them for new loans. The warning letter also said Alabama One had gone over the maximum amount permitted for new member business loans.

In October 2014, a new LUA was created after the ACUA and NCUA wrote a letter stating that a recent joint examination revealed the credit union's "future may be in serious jeopardy." CU Times has obtained copies of both the warning letter and the 2014 LUA.

In a March 2015 email obtained by CU Times, which is being used by Carruth's attorney in his federal suit, Smyth wrote to Byrne stating that his client Richard Turner is "more than a little perplexed by the reaction of Sarah Moore to the many issues which have been raised directly with her," and "we have been unable to explain her lack of interest in this whole matter." The email refers to seven attachments of "related correspondence," which were not made available to CU Times. "Incredibly, Ms. Moore has now advised that the ACUA has 'closed its file' on these issues without there being a resolution," Smyth continued in the email.

Lawyers for Carruth said the email proves that the further action Moore took against the credit union after its sent date was the result of her caving in to state officials.

"We closed our file on Ricky Turner's complaint because we referred it to the supervisory committee at Alabama One Credit Union," Richard P. Reynolds, an attorney for Moore, said. "That's what he's talking about. We didn't say, 'the credit union has done great.' The position of the (ACUA) is that Ricky Turner's damage claim against the credit union is without merit. We are, however, gravely concerned with how these loans originated. And that is why in the cease and desist order, we directed an investigation of these straw loans to determine why they originated and what was the purpose? In other words, was the purpose to reduce the outstanding loan balance by Danny Butler and his affiliates to the credit union by shifting that debt to Mr. Turner and others? If so, that is of grave concern to the credit union administration."

In April 2015, the ACUA and NCUA issued a cease and desist order. The cease and desist did not state that Carruth must be fired, but it made clear that Alabama One was expected to have a qualified person in that management position, among many other requirements.

"One of the issues Alabama One had with the cease and desist order was the short deadline on certain items, which made compliance extremely difficult, if not impossible," Carruth said. Alabama One filed an appeal to the cease and desist, and then later dropped that appeal.

"Alabama One was able to get the regulators to amend the cease and desist to put in more reasonable deadlines," he said. "Once this was done, Alabama One determined that it could comply with the terms of the cease and desist within these deadlines. Rather than incurring the expenses of seeing the appeal through, Alabama One chose to drop the appeal and simply comply with the cease and desist, which, in large part, covered items for which Alabama One was already in compliance."

On Jul. 28, 2015, former interim CEO Doug Key filed a motion to dismiss the suit against him. On Aug. 12, the judge gave Alabama One 15 days to state why it believed the suit should not be dismissed.

On Aug. 12, Moore filed a motion to dismiss the suit against her.

In seven different emails to the ACUA, attorneys for the ACUA and other state officials, Smyth referred to conserving the credit union, which has made Alabama One wonder if that topic will come up at the next ACUA board meeting.

"We have reason to believe that Alabama One will be on the agenda for the August 27th ACUA Board Meeting," Jeven Sloan, an attorney for Alabama One, said in an email. "We do not know and have not been able to confirm whether this is a certainty – or what the topic of discussion regarding Alabama One might be. However, we know that conserving Alabama One has been Mr. Smyth's primary goal all along, as evidenced by repeated requests he made to state officials during his improper campaign against Alabama One, including emails dating back to as early as Nov. 20, 2013. Thus, we believe that, based on how the regulatory process has continued to escalate and based on evidence we have seen in the referenced emails, it is possible that the discussion will center on the issue of conserving the credit union.  We have just begun to shine light on the web of connections by which this misdirected regulatory scrutiny evolved and are committed to continuing to expose this web of alleged corruption."