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Lubbock bank accused another bank of $6 million fraud

Allegations of insider info to support check kiting

LUBBOCK, Texas (KLBK/KAMC) - Vista Bank sued FirstCapital with allegations that it conspired with Rick Dykes and used insider information from Reagor Dykes to defraud Vista Bank out of $6 million or more by supporting “a massive check kiting scheme.” 

Check kiting is a way of trading checks between banks in a way that makes it look like money is available in an account. It’s a federal felony.

The lawsuit accuses Reagor Dykes of actually committing the check kiting.  It accuses FirstCapital of using insider information to make Vista take the loss.  

Vista claimed in a lawsuit filed electronically Tuesday evening that Rick Dykes is a co-owner of Reagor Dykes and until recently a member of the board of directors at FirstCapital. 

The lawsuit said, “Vista files this lawsuit to recover in excess of $6,000,000 in damages the Defendants inflicted on Vista through FirstCapital’s improper use of non-public, inside information the Defendants obtained through their close relationship with Rick Dykes, an insider of both Reagor-Dykes and FirstCapital.”

“That inside information allowed FirstCapital to benefit from the Reagor-Dykes’ check kiting scheme at Vista’s expense,” the lawsuit also said.

“In fact, FirstCapital transitioned Dykes from a Director to its Board of Advisors to avoid banking regulatory scrutiny …,” the lawsuit said.

Vista accused FirstCapital of knowingly profiting from the check kiting. 

“FirstCapital found a way to use its insider access to Dykes to channel over $6,000,000 in losses and damages to Vista, allowing FirstCapital to knowingly profit from the scheme,” the lawsuit said. 

Vista said Dykes told FirstCapital about the Reagor Dykes bankruptcy on a Saturday which would be four days before it happened.  FirstCapital knew.  Vista had to find out through news reports.  

“[FirstCapital] used the inside information Dykes provided them to act against Vista, weaponized the check clearance process and systematically foisted over $6,000,000 in damages onto Vista,” the lawsuit said.

“FirstCapital blew up the standard process and ‘worked all night’ in a greedy attempt to ram return items onto Vista,” the lawsuit said.

First Capital Bank released a statement saying:

“This is a lawsuit which asserts claims that are without merit either in law or in fact.  FirstCapital Bank utilized legally appropriate procedures available through the bank collection process to return checks presented by Vista Bank to FirstCapital for payment and which FirstCapital was legally entitled to reject. As always, we will continue to act in the best interest of our shareholders, customers, team members and communities.”

CLICK HERE to read the Vista lawsuit. 

Related Stories: Reagor Dykes - extended coverage of the bankruptcy

 


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