AMARILLO, Texas (KAMR/KCIT) — In a shortened morning session at Amarillo Federal Court, the prosecution rested its portion of the Bart Reagor jury trial at approximately 10:50 a.m. Wednesday, the third day of the trial.
During this last portion of the prosecution’s case, they brought forward three witnesses:
- Steven Reinhart, the Reagor Dykes Auto Group’s former legal compliance director;
- John Whitworth, former FBI special agent;
- Steven Dawson, a certified public accountant and certified fraud examiner.
This comes after the prosecution brought forward four witnesses Tuesday, including a more than three-hour session with former Reagor Dykes Auto Group Chief Financial Officer Shane Smith. The other three witnesses were individuals 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.
According to previous reports by MyHighPlains.com, Reagor is facing two counts of bank fraud and one count of making false statements to a bank. Reagor pleaded not guilty to the counts in an Amarillo Federal Court appearance in April. The government is claiming that Reagor committed these crimes transferring a portion of the $10 million IBC working capital loan to his personal bank account for personal use.
In his role at the auto group, Reinhart mainly served as the liaison between the auto group and outside council, as well as the supervisor for the auto group’s attorneys. According to previous reports by MyHighPlains.com, Reinhart pled guilty earlier this year to one count of misprision of a felony and is facing time in prison.
During his testimony, Reinhart said he was first aware of the IBC loan when Smith, Reinhart’s supervisor, asked him to review the loan agreement documents. To his knowledge at the time, Reinhart said the purpose of the loan agreement was for working capital, the cash cushion for day-to-day operations of the auto group, as well as consolidating property debt.
The first time Reinhart found out about Reagor was using some of the loan funds for personal use was after what he called “d-day,” the day the dealerships imploded. Reinhart eventually saw the email sent to Smith and co-owner Rick Dykes where Reagor outlined his intentions to take out a 33.3% cut of all the loan proceeds to both Reagor and Dykes’ personal bank accounts as a “personal equity offset reserve” during the investigation.
Reinhart said if he knew Reagor’s intention, he would have told Reagor that he could not use a portion of the IBC loan for his personal use. Reinhart also stated that he did not realize the bonuses he received from closing the IBC loan, consisting of $10,000 in two $5,000 installments, were from the loan itself. As the defense questioned Reinhart, officials continued to question his credibility, stating that he was only testifying because of the potential of a shorter prison sentence, a similar claim posed to Smith during questioning Tuesday.
The jury also heard from Whitworth, the former FBI special agent who was the lead case agent in the RDAG investigation. He detailed the process of how the FBI traced the proceeds of the $10 million loan from IBC to the auto group through records from IBC, FirstCapital Bank of Texas, the bank that the auto group uses, and Prosperity Bank, the bank where Reagor’s personal account is located.
Officials from the prosecution then questioned Whitworth about the various ways Reagor spent the $1.76 million received through the loan, through various personal expenses, investments, and payments to family members.
In their line of questioning to Whitworth, the defense stressed numerous times that there was nothing wrong with using personal, legal, funds for personal expenses, investments, and payments to family members. The defense questioned whether or not the funds that Reagor was using for these transitions were illegal in nature.
The government’s last witness, Dawson, provided expert testimony on a review of the auto group’s various financial statements and documents. In the loan agreement, he said that he would expect working capital to go into a business account for business purposes. Dawson also highlighted the legitimacy of Whitworth’s account of the tracing of the loan funds.
However, when asked by the defense if the term “working capital” was specifically outlined in the loan agreement, Dawson said there was not a definition of working capital in the agreement.
After the prosecution’s witnesses
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. Cogdell stated his belief that the prosecution failed to prove its case beyond a reasonable doubt, highlighting numerous testimony given that Smith was the main contact with IBC about the working capital loan and throughout the creation of the loan agreement.
In response to this motion, Jeffrey Haag, a part of the prosecution’s counsel, argued this motion, stating that the testimony given numerous times about an April 2017 meeting between IBC officials and RDAG officials, including Reagor, Smith, and co-owner Rick Dykes, outlined the purpose of the $10 million working capital loan. Haag said during this meeting, it was established that the only purpose of the loan was for day-to-day operations of the auto group and not to enrich Reagor and other RDAG officials.
In response to the defense’s motion, and after the prosecution responded, U.S. District Judge Matthew J. Kacsmaryk, the federal judge overseeing Reagor’s trial, denied the defense’s motion for acquittal, stating that the defense will have the opportunity to renew its motion after the defense presents its case.
The defense is expected to start its case at 1 p.m. Wednesday. Officials with the defense are expected to call numerous witnesses including Charles Darter, a certified public accountant out of Lubbock, and Joe Landin, a former RDAG employee. Dykes was previously on the defense’s witness list, however, officials with the defense stated Wednesday morning that they had made the decision to not call Dykes as a witness.
This story is developing. Check with MyHighPlains.com for updates.