Alabama One Credit Union, represented by Campbell Guin, filed suit against its insurance company, CUMIS Insurance Society Co. In the suit, Alabama One sought insurance coverage for a multi-million dollar loss caused by former credit union officers, including John Dee Carruth (the former CEO) and Tammy Ewing (the former Business Lending Manager).
The lawsuit alleged these former officers dishonestly approved and administered a $7 million loan to a company owned by Danny Ray Butler, a used car salesman and convicted felon. The loan’s purpose was to fund the construction of a sewer treatment plant in Fosters, AL. However, Butler diverted millions of dollars of loan proceeds for personal gain, including spending more than $700,000 to purchase a beach condo in Destin, FL. Carruth, Ewing, and other former officers failed to properly underwrite this loan, and approved it knowing it violated a multitude of federal laws and credit union policies. More egregiously, Ewing knew Butler was using loan proceeds for personal expenditures. Indeed, Ewing herself signed the check that was drawn from the loan proceeds and used to purchase the aforementioned Destin condo.
The lawsuit recently settled for $2,250,000. This amount represents a substantial recovery for Alabama One’s members and will help the credit union move forward under new leadership.
Read more about the settlement in the Birmingham Business Journal, here.