AMARILLO, Texas (KAMR/KCIT) — Reagor Dykes Auto Group Co-Owner Bart Reagor saw the beginning of his jury trial on Oct. 11, continuing the more than three-year saga in which the auto group fell into bankruptcy and numerous employees were charged for federal crimes related to various forms of fraud.
According to previous reports by MyHighPlains.com, Reagor appeared in federal court in April, pleading not guilty to counts of bank fraud and making false statements to a bank. This comes after Ford Motor Credit filed a lawsuit against the auto group in July 2018 with accusations of floor plan fraud. Various banks also accused the auto group of check-kiting practices.
The MyHighPlains.com team will have ongoing coverage of this trial when it begins Monday. This page will be updated as the story develops.
- Ford Motor Credit filed an electronic lawsuit against the Reagor Dykes Auto Group, accusing the auto group of defaulting on approximately $40 million in debt.
- The company later accused the auto group of floor plan fraud. A floor plan is a type of loan for auto dealerships. The lawsuit stated that out of 150 vehicle sales, an audit from Ford Motor Credit reported that the sales dates and other information did not match for 147 of them.
- Reagor Dykes Auto Group, along with other related companies, filed for Chapter 11 bankruptcy, a form of reorganizational bankruptcy, coming one day after Ford Motor Credit sued the auto group in federal court.
- The Reagor Dykes Auto Group filed a motion in federal court, which aimed to stop the lawsuit from Ford Motor Credit.
- A bankruptcy court eventually ruled that the auto group could continue to pay its employees. In a statement, officials from the auto group stated they were thankful to be allowed to continue to pay their employees and provide their benefits. “There is no question that the past seven days have been difficult for the Reagor Dykes Auto Group family, but we are determined to continue to work with Ford Motor Credit in selling our current inventory and providing the best possible service to our customers,” the statement read.
- Both the Reagor Dykes Auto Group and Ford Motor Credit filed briefs in federal court, detailing their thoughts on why a federal lawsuit should or should not continue. According to reports, a bankruptcy filing would normally put a lawsuit on hold. However, the list of companies in the lawsuit did exactly not match the companies which filed for bankruptcy and Reagor, as well as co-owner Rick Dykes, did not personally file for bankruptcy.
- The auto group announced that while all locations were open for business, they are operating with limited personnel.
- The Reagor Dykes Auto Group filed to hire a Chief Restructuring Officer (CRO) to internally investigate the company. The auto group states that a restructuring officer was needed “because of the departure of the former CFO and the current state of flux in which the Debtors are trying to make certain their financial data can be reliable and relied upon.”
- Through bankruptcy court records, officials with Ford Motor Credit laid out details of its fraud accusations to the Reagor Dykes Auto Group. Officials said that it “may be one of the largest floor-plan-financing frauds in the history of the United States.” They also detailed their claims of check-kiting, as well as double flooring, stating that vehicles were financed twice by Ford Motor Credit.
- The Office of the United States Trustees filed an objection to the auto group’s motion to hire a CRO. The office states that the jobs outlined by the Reagor Dykes Auto Group in its motion could all be fulfilled by a trustee, stating, “Given the pending motion to appoint a trustee, it appears the better course of action would be to deny the request for a CRO, and have the court direct the appointment of a trustee to manage this case.” At this point, a trustee had not yet been approved to oversee the RD bankruptcy, but Ford made the request.
- Ford Motor Credit filed more allegations against the auto group, stating that the company failed to return all demonstrator vehicles; failed to register vehicles sold to consumers; failed to pay off trade-in liens and failed to provide Ford with keys and titles to vehicle inventory.
- Officials with the Reagor Dykes Auto Group issued an apology to its customers and employees, stating that the group “never want(ed) to let anyone down but we have had our hands tied for the past two weeks. We intend and we want to address every situation we can with solutions as soon as we possibly can.”
- A Bankruptcy Court judge allows the auto group the ability to pay employees and other immediate expenses through Aug. 30.
- Vista Bank, based out of Lubbock, filed a lawsuit against FirstCapital Bank, claiming that it conspired with Dykes with information from the auto group to defraud Vista Bank out of $6 million through a check kiting scheme. This figure was eventually increased to $18 million on Aug. 27, 2018.
- Check kiting is a scheme of trading checks between banks in a way that makes it look like money is available in an account. According to previous reports, the lawsuit accuses the auto group of this practice, and of FirstCapital of using insider information to benefit from the scheme and for Vista Bank to take the loss. Officials with FirstCapital said at the time that the bank “utilized legally appropriate procedures available through the bank collection process to return checks presented by Vista Bank.”
- Ford Motor Credit amended its lawsuit, continuing the lawsuit against the Reagor Auto Mall, Reagor Dykes II, Reagor Dykes III LL as well as Reagor and Dykes themselves. The companies that filed for Chapter 11 bankruptcy had protection against the lawsuit at the time.
- The auto group receives permission from the court to use a CRO for some tasks, mostly to replace former Chief Financial Officer Shane Smith.
- Dykes denied any wrongdoing in a written court record. Dykes accused a former employee of wrongdoing, stating that the former employee was the chief financial officer until he was fired.
- A bankruptcy judge gave permission for 13 Reagor Dykes Auto Group locations to be sold at auction. The judge also approved the auto group to have the ability to spend money “on immediate expenses like paying employees” for one month, including rent.
- Officials with Vista Bank announced that they filed a document in bankruptcy court, alleging that the auto group defaulted on a $2 million loan. Documents read that because the auto group filed for bankruptcy, the bank would need permission before taking a certificate of deposit from the auto group.
- Officials from First Bank & Trust sued the Reagor Dykes Auto Group, Reagor, Dykes, Smith, FirstCapital Bank, Sheila Miller, Brad Burgess, and Kenneth Burgess for check kiting. The bank also accused the auto group of defaulting on loans. This was the third bank to make allegations of check kiting, the others being Vista Bank and FirstCapital.
- Five more Reagor Dykes Auto Group companies filed for Chapter 11 bankruptcy,.
- Ford Motor Credit amended its lawsuit actively suing only Reagor and Dykes and not the auto group companies. The company requested a court order “… all remaining claims and counterclaims among Ford Credit and Bart Reagor and Rick Dykes are not stayed and shall proceed.”
- Ford Motor Credit filed a request to remove bankruptcy protections from the auto group’s companies which filed for Chapter 11 bankruptcy last year. Officials from Ford Motor Credit stated at the time that a reorganization plan was promised but has not been provided.
- Smith asked a federal judge for a protective order. Smith was fired shortly after Ford Motor Credit alleged the auto group of default and fraud. Smith argues that on the one hand he has the right to defend himself against the lawsuit, and on the other hand he has the right to avoid self-incrimination.
- A bankruptcy judge authorized the auto group to be able to borrow up to $1 million for immediate expenses.
- Ford Motor Credit filed court documents, claiming that both Reagor and Dykes owe the Ford Motor Credit company more than $100 million.
- Dykes agreed to pay Ford Motor Credit $58.7 million in a settlement out of court, according to court records. This comes after both Reagor and Dykes previously signed a personal guarantee with Ford, promising to make good on the debt if the companies could not.
- Ford Motor Credit states that Reagor owed $46,740,904.61 plus interest in court document. Interest of $7,043.15 per day would start after a federal judge signs the final judgment.
- Smith was charged with felony conspiracy to commit wire fraud and accepted a plea deal. The criminal charge said Smith committed “floor plan” fraud. A floor plan is a particular kind of loan for auto dealerships that covers a list of vehicles. The criminal complaint said “[Reagor Dykes] staff would retrieve files from old car deals and submit the … [VIN numbers] … as though [Reagor Dykes] were buying the vehicles against when in fact it was not.”
- Two Reagor Dykes Auto Group employees, Sheila Miller and Diana Urias, pleaded guilty to conspiracy to commit bank fraud. Both were related to the alleged check kiting scheme.
- Two Reagor Dykes Auto Group employees, Paige Johnston and Lindsay Williams, pleaded guilty to the charge of conspiracy to commit bank fraud. Johnston’s charge stems from the alleged fake floor plans filed by the dealerships with Ford. Williams’ charge stems from the allegations of check-kiting made against the dealership.
- Brad Fansler, the Reagor Dykes Auto Group’s administrative director, pleaded guilty to one count of conspiracy to commit wire fraud. Court documents state that Fansler admitted to floor plan fraud.
- Two Reagor Dykes Auto Group employees, Pepper Rickman and Sherri Wood, pleaded guilty to the charge of conspiracy to commit wire fraud. Both Rickman and Wood admitted that the auto group participated in a fraudulent floor plan fraud scheme.
- Ashley Dunn pleaded guilty to a charge of conspiracy to commit bank fraud. According to court records, Dunn was hired in 2014 as the executive assistant to Smith.
- Elaina Cabral pleaded guilty to willfully committing wire fraud. According to court records, Cabral admitted that “she participated in a scheme to unlawfully enrich Reagor Dykes Auto Group, herself and others by deceiving Ford Motor Credit.”
- Mistry Canady accepted a plea agreement in federal court. This comes after Canady and other employees of the Reagor Dykes Auto Group falsified paperwork so the dealerships would not have to pay back the loans to Ford Motor Credit on time. According to court records, Canady was employed by the auto group in 2010 and was promoted to office manager of the Spike Dykes Ford location in Lamesa.
- Documents filed in bankruptcy court stated that Vista Bank “knowingly facilitated and participated in the fraudulent schemes of Debtor’s former Chief Financial Officer Shane Smith.” The documents state that Vista Bank President John Steinmetz enriched himself through kickbacks.
- Andrea Kate Phillips, an accounting associate in the corporate office for the Reagor Dykes Auto Group, pled guilty for a charge of a misprision of a felony.
- Officials with the U.S. Marshals Office served Reagor with a writ of execution, attempting to collect a $49.2 million judgement against Reagor. Officials found Reagor after 5 p.m. at a CVS Pharmacy in Lubbock.
- Reagor was charged and indicted on two counts of bank fraud and one count of making false statements. Officials from the Northern District of Texas claim that Reagor diverted business loan funds into his personal bank accounts in violation of a loan agreement with International Bank of Commerce.
- Reagor appeared in federal court, pleading not guilty to two counts of bank fraud and one count of making false statements. Reagor maintained his innocence, with his attorney Dan Cogdell stating “He was deceived by people that he trusted and relied upon, and in turn, those people stole from him and others and caused the implosion of his business.”
Thirteen former Reagor Dykes Auto Group employees were sentenced in federal court for their various charges in the scheme:
- Andrea Phillips, an accounting associate and office manager at Reagor Dykes Plainview, pleaded guilty to concealing a felony and was sentenced to four years of probation and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Diana Urias, an office manager in Reagor Dykes’ used car mall in Levelland, pleaded guilty to conspiracy to commit bank fraud and was sentenced to two years in federal prison and ordered to pay $19,335,901.10 in restitution, joint and severally;
- Sheila Miller, an RDAG group controller, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 27 months in federal prison and ordered to pay $19,335,901.10 in restitution, joint and severally;
- Paige Johnston, an office manager in Reagor Dykes’ Chevrolet store in Floydada, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 27 months in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Lindsay Williams, an RDAG group accounting manager, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 27 months in federal prison and ordered to pay $19,335,901.10 in restitution, joint and severally;
- Sherri Wood, an office manager at Reagor Dykes’ Ford store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 30 months in federal prison and was ordered to pay $40,254,297.72 in restitution, joint and severally;
- Pepper Rickman, an accounting controller at Reagor Dykes’ Toyota store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to four years in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Brad Fansler, an RDAG group administrative director, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 42 months in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Ashley Dunn, executive assistant to Shane Smith, the former chief financial officer at Reagor Dykes Auto Group., pleaded guilty to conspiracy to commit bank fraud and was sentenced to 30 months in federal prison and ordered to pay $19,335,901.10 in restitution, joint and severally;
- Whitney Maldonado, an office manager at Reagor Dykes’ Mitsubishi store in Lubbock, pleaded guilty to conspiracy to commit wire fraud and was sentenced on 27 months in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Elaina Cabral, an office manager at Reagor Dykes’ Toyota store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 27 months in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Mistry Canady, an office manager at Reagor Dykes’ Ford store in Lamesa, pleaded guilty to conspiracy to commit wire fraud and was sentenced to two years in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally;
- Wesley Neel, the safety and compliance manager for the auto group, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 30 months in federal prison and ordered to pay $40,254,297.72 in restitution, joint and severally.
- Reagor’s defense raised some written objections prior to his trial beginning Oct. 12. The trial brief states that Reagor’s conduct was “wholly permissible,” with Reagor denying any criminal conduct. This comes after federal prosecutors said the Reagor Dykes Auto Group took out a loan from IBC Bank and then diverted more than $1.7 million of loan money to his personal bank account.
- The brief also filed an objection for certain exhibits at the upcoming trial, including “evidence of Reagor’s net worth.” The prosecutors also filed an objection, preventing Reagor from calling Marcus Helt, an attorney from the auto group during the bankruptcy case. Federal prosecutors wrote, “Reagor wants Helt to testify that he has reviewed numerous documents in the bankruptcy case and, in his opinion, Reagor is not guilty of fraud.”
- U.S. District Judge Matthew J. Kacsmaryk, the federal judge overseeing Reagor’s trial, put limits on the evidence which will be presented to the jury when the trial begins Tuesday. The limits include the following:
- Prosecutors and the defense may not tell the jury about the sheer quantity of information each side had to share with the other;
- They cannot tell the jury about the various lawsuits and the Reagor Dykes bankruptcy cases;
- They cannot tell the jury about accusations of criminal behavior of RDAG employees, such as check kiting;
- They cannot tell the jury about Bart Reagor’s net worth;
- They cannot tell the jury about his quotes in the leaked video such as he “does whatever he wants.” However, the quotes may come up to impeach a witness on the stand.
- Reagor saw the beginning of the jury trial in Amarillo Federal Court. In setting a goal to have the case completed by the end of the week, the court set down a schedule of working 8 a.m. – 6 p.m. each day. A jury was selected after extensive questioning, sometimes over previous news coverage of the other tumultuous legal situations surrounding Reagor-Dykes as a business and its employees.
- Kacsmaryk said to both the prosecution and the defense that this case should not be one where “the government tries a case of guilty by association or where the defense tries a case of not guilty by association.”
- The meat of the Bart Reagor Jury Trial began Tuesday morning with opening statements from both the prosecution and the defense as well as three witnesses involved with the International Bank of Commerce (IBC), the entity from which the Reagor Dykes Auto Group (RDAG) received a $10 million working capital loan.
- For more than three hours Tuesday afternoon, officials from the prosecution and the defense questioned former Reagor Dykes Auto Group Chief Financial Officer Shane Smith as a witness on day two of the jury trial of Bart Reagor in Amarillo Federal Court. However, his credibility was questioned multiple times during his testimony in the wake of his own guilty plea.
- In a shortened morning session at Amarillo Federal Court, the prosecution rested its portion of the Bart Reagor jury trial. Three witnesses were brought forward – Steven Reinhart, the Reagor Dykes Auto Group’s former legal compliance director; John Whitworth, former FBI special agent; and Steven Dawson, a certified public accountant and certified fraud examiner.
- After the prosecution rested its case, and the jury left the courtroom, Dan Cogdell, a part of the defense counsel, raised a motion to acquit Reagor on all charges based on the case the prosecution gave. After a back and forth with the prosecution, the acquittal motion was denied.
- The defense took only 87 minutes to present its portion in the Bart Reagor jury trial that afternoon.
- After both the prosecution and the defense presented its witnesses during Wednesday’s portion of the Bart Reagor jury trial, the jury, as well as others in the courtroom, heard final, closing arguments from both the prosecution and the defense.
- Once closing arguments concluded, the jury deliberated for more than seven hours. At the end of the day, U.S. District Judge Matthew J. Kacsmaryk, the federal judge overseeing Reagor’s trial, received a note from the jury that they were in deadlock and could not reach a verdict. Kacsmaryk encouraged the jury to continue its deliberation.
- At 5:38 p.m., Kacsmaryk returned to the courtroom with a response from the jury to the court’s response to the deadlock note, with the jury stating the following: “There is no way we can be unanimous. Can we, at least, be dismissed for the day?” In response to this note, Kacsmaryk brought the jury into the courtroom, stating that he was going to bring the court into recess until 10 a.m. Friday, where they would continue deliberations.
- After nearly two days of deliberation and a portion of time where the jury was reported to be in deadlock, the jury ruled that Reagor was found guilty on one count of making false statements to a bank and not guilty for two counts of bank fraud.
- At 2 p.m., after the jury continued to be deadlocked, Kacsmaryk invoked a modified Allen Charge, imploring the jury to continue deliberations for the case. He stressed that the jury had a “duty to agree on a verdict,” stating that if they could not come to an agreement, the case would continue to be open and Reagor would continue to be under indictment.
- After the verdict was read, Reagor was released on the same conditions of his pretrial release, with him not being a flight risk and not being a danger to others or himself. Reagor’s sentencing has not yet been scheduled but officials expect the schedule will come in a few weeks.