Last month, Ewing filed a sex discrimination lawsuit against the ACUA claiming she was fired because of her gender. The state regulator did not give a reason for Ewing's termination and even admitted in a deposition that Ewing was not guilty of any misconduct, according to her lawsuit.

Moreover, CUMIS, which provided the insurance bond policy to Alabama One, said in court documents that it hasn't been able to confirm whether the "dishonest acts" allegations that caused the business loan losses are true.

Additionally, CUMIS claimed it rescinded the insurance bond policy because Alabama One failed to divulge a 2014 joint examination report by the ACUA and the NCUA. Not previously reported publicly, the report downgraded the credit union's CAMEL rating, designated Alabama One as a troubled condition credit union and required the cooperative to take certain unknown actions on the business loan taken out in 2008 by a used car dealer and longtime Alabama One member Danny Ray Butler. He used the business loan to finance the construction and operation of a speculative sewer treatment facility that went bankrupt.

Interestingly enough, this business loan also led to a 2011 ACUA and NCUA Letter of Understanding and Agreement with Alabama One, also not previously reported publicly. The LUA included several issues but focused on the credit union's relationship with Butler.

Once the credit union successfully addressed corrective actions, the LUA was lifted in April 2013.

But just six months later in October 2013, Butler was indicted by a federal grand jury.

In its 51-count indictment, the jury charged Butler with wire fraud and bank fraud that involved a check-kiting scheme that caused Alabama One to risk losing $1.2 million. He also defrauded $1.7 million from the U.S. Small Business Administration and $50,000 from a finance company.

Soon after news of the indictment broke, Alabama One members raised questions about the credit union's relationship with Butler. They filed lawsuits over losses they claimed they suffered because of the loans that the credit union allegedly made for Butler in their names. Those lawsuits were followed by even more lawsuits 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.

Butler pleaded guilty to the charges in the indictment and was sentenced to three years in prison in July 2014. Butler was released from prison on July 29, 2016, according to the Federal Bureau of Prisons.

When Butler was in prison, however, the sewer treatment facility fell into bankruptcy in October 2014.

By August 2015, the state regulator conserved the Alabama One, claiming the credit union officers and employees showed persistent patterns and practices of allowing insiders to have loans on preferential terms and conditions, falsified loan information for insider auto loans and accepted things of value in exchange for making loans, among other charges. The senior executive staff was fired and board members were removed.

Carruth and other employees have repeatedly denied these allegations and have two federal lawsuits pending that are challenging the state's takeover of the credit union, the termination of employees and the removal of board members.

By the end of 2015, Alabama One posted a net loss of $8 million, according to NCUA financial performance reports

While only a few of the allegations against the credit union's executives and other employees dripped out from publicly available legal depositions, the Alabama One civil lawsuit against CUMIS reveals for the first time details about how the $3.5 business loan — and its $3.5 million in added principal — was doomed from the beginning because the loan application and its internal credit memorandum prepared by Ewing were allegedly based on inaccurate and nonsensical information and blatant violations of the credit union's member business lending policies.

The memo simply used unsupported information supplied by Butler, including that the sewer treatment plan was authorized to serve 2,500 homes, with an option to serve 5,000 homes, but there was no documentation to substantiate that claim.

According to court documents, Ewing's memo incorrectly indicated the loan-to-value ratio of 48%, the same figure supplied by Butler, but that assumed a $2.4 million loan, not a $3.5 million loan.

"Indeed, Ewing even listed low LTV as one of the strengths of the requested loan," Alabama One claimed in its lawsuit. "In doing so, Ewing failed to identify numerous deficiencies, errors and USPAP (Uniform Standards of Professional Appraisal Practice) violations, including failure of the appraiser to meet the competency requirements for the project, failure of the appraiser to utilize the appropriate methods of valuation, and failure of the appraiser to provide adequate information to support their valuation."

Despite these issues and others, Ewing recommended that Alabama One green light the loan. Approval of the loan rested with the business loan committee, which included Ewing, Carruth and Debbi Camp, Alabama One's former chief lending officer.

According to court documents, however, the business loan committee approved the loan application even though it was missing required documents such as a business plan, a detailed explanation of the proposed use of funds, a copy of the construction contract, building permit and the contractor's license. The loan application also did not include satisfactory credit reports on all the principals, borrower and guarantor financial statements and an analysis of industry averages or earnings potential based on comparable facilities.

In its lawsuit, Alabama One alleges Ewing, Carruth and Camp demonstrated "dishonest and/or fraudulent disregard to perform their duties."

"This is especially true given Carruth's necessary awareness of the MBL policy and the degree of managerial control, as CEO of Alabama One, he exercised over the other members and the member business loan committee," the credit union stated in its lawsuit.

Carruth's lawyer dismissed the Alabama One lawsuit as nothing new.

"It is simply a continuation of the campaign that we allege has been waged against Mr. Carruth and other former employees for years," Jeven R. Sloan, a Birmingham-based lawyer, said. "The Alabama Credit Union Administration, with the active involvement of the former Governor of Alabama and others within and outside of state government, has made countless charges and allegations against these former employees in an attempt to justify the unwarranted sanctions against Alabama One, ultimately culminating in the takeover of the credit union by the State of Alabama."

He noted that Carruth and other terminated employees, including the removed board members, have been waiting almost two years for their day in court to challenge the actions taken and to show that the allegations lodged against them are untrue.

Two lawsuits are pending in federal court. One lawsuit, filed by Carruth, employees and board members, is appealing the conservatorship. They argue the state's takeover of the credit union was unlawful and was part of a political agenda. The other lawsuit, filed by Carruth, includes allegations against lawyers that they allegedly participated in a conspiracy that violated the former CEO's constitutional rights of due process and other issues.

"Like the other incredible and false allegations these parties have made against Mr. Carruth, the allegations of 'dishonest acts' in the CUMIS lawsuit will not stand up against the evidence," Sloan said.

Nonetheless, shortly after Butler's business loan was approved, Ewing got a $43,000 loan from Alabama One and used it to buy a BMW from Butler's used car business for $42,000, a discount of more than $5,000 from the car's fair market value, according to court documents.

"The timing of this transaction strongly suggests that Ewing received a thing of value in return for her efforts in getting the application approved," Alabama One alleged in its lawsuit. "This is just one example of Ewing's financial entanglement with Butler. For example, she also used, at no cost, condominiums and other real property owned by Butler and personally loaned Butler money."

Ewing's attorneys, Barry and Brandi Frederick in Birmingham, did not return an email and phone call message last week seeking comment.