AMARILLO, Texas (KAMR/KCIT) – After 14 of his former employees went through hearings, being sentenced to more than 300 months of federal prison combined on their respective fraud charges, Shane Smith, the former chief financial officer for the Reagor Dykes Auto Group, and the individual who was called the “architect” and the “orchestrator” of the group’s extensive fraud scheme faced his own sentencing hearing Thursday afternoon in Amarillo Federal Court.
Smith was sentenced to 84 months in federal prison in Amarillo Federal Court Thursday afternoon. This comes after Smith pled guilty to one charge of conspiracy to commit wire fraud in June 2019. Smith was also sentenced to one year of supervised release and a requirement to jointly pay $59,590,198.82 as part of two restitutions with other sentenced employees. The funds will go to the Ford Motor Credit Company as well as FirstBank and Trust, the International Bank of Commerce and Vista Bank.
What led to Smith’s sentencing?
According to previous reports by MyHighPlains.com, the Ford Motor Credit Company filed a lawsuit against the auto group in July 2018 with accusations of floor plan fraud. At the time, various banks also accused the auto group of check-kiting practices. The accusations led to the auto group’s bankruptcy in August 2018.
After pleading guilty in June 2019, officials said that Smith outlined the overall fraud scheme, cross-depositing checks across multiple banks and directing staff members to use vehicle identification numbers of sold cars to submit new loan applications to Ford Motor Credit and using the loan funds to cover other expenses.
Prior to his sentencing hearing, Smith testified in the trial of Reagor-Dykes Auto Group co-founder Bart Reagor in October 2021. According to previous reports, a jury convicted Reagor of making false statements to a bank, but finding him not guilty for two counts of bank fraud during an October trial. According to previous reports from MyHighPlains.com, Reagor was convicted of intentionally using $1,766,277.77 out of a $10 million capital loan from the International Bank of Commerce for personal gain after officials told the bank that it was solely to be used for the growth of the auto group.
During his testimony, Smith spoke on how he was included in the conversations, as well as email exchanges, on how Reagor, as well as co-owner Rick Dykes, were going to handle the IBC Bank loan, which included disbursements to the co-owners and bonuses for other auto group officials.
During his testimony, Smith said he was initially frustrated by being included in the conversations surrounding the loans, saying at the time that he was “really hoping we could use the money for the Reagor Dykes entities who needed it.” But with his initial frustrations, Smith did not raise his concerns to Reagor at the time, which the defense claimed caused Reagor not to think what he was doing with the loan was illegal.
What happened during Thursday’s sentencing hearing?
At the beginning of the sentencing hearing, U.S. District Judge Matthew J. Kacsmaryk – the judge who oversaw the entirety of the case, including Reagor’s trial and the numerous sentencing hearings, outlined that Smith was facing 96 months in prison, already calculating the downward variance brought forward by the prosecution. The maximum sentence that Smith was facing was 240 months, or 20 years, in prison.
After outlining the charges Smith faced, including the check-kiting scheme, the floor plan fraud and the commercial loan fraud, Kacsmaryk stressed that Smith caused “immense financial harm” to banks, customers as well as other entities in the “largest floor plan fraud in United States history.” Kacsmaryk then took time out of the hearing to list all the 14 former employees who were sentenced to federal prison after participating in the auto group’s scheme that Smith perpetuated.
Kacsmaryk then outlined the numerous reasons why he was considering mitigation in his sentencing, including the love and care Smith has for his family, along with his persistent contrition and “extensive cooperation with law enforcement. Kacsmaryk went on to say that no other co-defendant provided better information and the whole investigation could not have been done without Smith’s information and his cooperation.
In an initial presentation to the court, Jeffery Haag, a member of the prosecution’s legal team, talked about his time preparing Smith to take the stand and testify during the Reagor trial. Throughout that process, Haag said two things stood out to him, including how Smith never asked how assisting the investigation would help his sentence. Haag also highlighted how honest and truthful Smith’s testimony was during the trial, not sugarcoating or diminishing his involvement.
Haag said that there was no doubt that what Smith did was wrong, but he did whatever he could to make it right, taking every possible step to fix the mess that he made.
Edwin Morris, Smith’s attorney, urged the court to consider a lesser sentence, taking into consideration Smith’s familial situation, with Smith having a son with special needs. That relationship with his family was also highlighted in the 18 written character statements, and the live character statements given by his sister, his stepfather and a friend. Smith’s supporters continued to highlight how he took responsibility for his action, while continuing to be loyal and a pillar of strength to his family and friends.
In final arguments, Joshua Frausto, a member of the prosecution’s team, said that after overseeing the other 14 sentencings related to the investigation, Smith stood out to him because he continued to take responsibility and cooperate with federal officials. He then said the prosecution believes that 90 months was an appropriate sentence.
In Morris’s portion of final arguments, he continued to stress a lower sentence for Smith, saying that his client was unique in his cooperation. He initially suggested the 40-month range.
“What do we gain by the 90 months that we wouldn’t gain by the 40?” Morris asked Kacsmaryk, stressing that Smith did everything humanly possible to make his wrong actions right.
After hearing from the multitude of character statements and after final arguments, Smith took the opportunity to apologize again during his allocution prior to his sentencing, apologizing to the court, to citizens, to victims, to the former Reagor-Dykes Auto Group employees and to his family. He said he accepts full responsibility for his actions.
“I have failed,” Smith said as he was tearing up during his allocution. During the allocution, Smith later noted that the one thing that he has not failed was the relationship with his son.
Smith will be required to report to prison by 2 p.m. March 28, with Kacsmaryk recommending his sentence be served in Big Spring. According to previous reports by MyHighPlains.com, Reagor’s sentencing is scheduled for 10 a.m. March 10, in Amarillo Federal Court