Shane Smith, Steven Reinhart expected to testify in Bart Reagor trial
LUBBOCK, Texas (KCBD) - Fifteen former Reagor-Dykes Auto Group employees pleaded guilty to various crimes involving “dummy flooring” and check kiting at the fallen auto giant. All but two of them have been sentenced. The two remaining former employees are set to testify in the trial for Bart Reagor in October.
A federal grand jury indicted Bart Wade Reagor, 55, on April 22, 2021, on two counts of bank fraud and one count of making false statement to a bank insured by the FDIC. If convicted, Reagor faces up to 90 years in federal prison, and will be required to forfeit any property traceable to the offense. The trial is scheduled for Oct. 12, 2021 at the federal courthouse in Amarillo.
Former RDAG CFO Shane Smith is the first witness on the list to testify in the trial. Smith pleaded guilty in 2019 to one count of wire fraud. He faces up to 20 years in prison, probation and pay a restitution of more than $50 million. He was the first person to receive a criminal conviction since RDAG filed for bankruptcy and was sued by Ford Motor Credit in August of 2018. After many delays in his sentencing, it has been scheduled for December 21, 2021 at the Amarillo federal courthouse.
According to the federal witness list, Smith is expected to testify during Bart Reagor’s trial about the background of Reagor-Dykes Auto Group (RDAG). He is also expected to testify about RDAG’s need for working capital and RDAG’s weak cash position after the March 2017 floor plan audit. Smith is also slated to talk about the working capital loan International Bank of Commerce (IBC) provided to D and R Acquisitions, LLC and how those working capital loan proceeds were distributed per Reagor’s instructions. Smith is also expected to testify about the daily Skype meetings.
The second witness on the list is Steven Reinhart. Reinhart, the former RDAG Legal Compliance Director, pleaded guilty in February 2021 to misprision of a felony. He faces up to three years in federal prison, up to a year of supervised release, and a fine not to exceed $250,000. He could be ordered to pay restitution as well. He is scheduled to also be sentenced on December 21, 2021 at the Amarillo federal courthouse. He was the last employee to be indicted and the last to enter a guilty plea.
According to the federal witness list document, Reinhart will testify about the working capital loan International Bank of Commerce (IBC) provided to D and R Acquisitions, LLC and his review and understanding of the purpose of the loan. He is also expected to testify that he had no knowledge that Reagor caused IBC working capital loan proceeds to be diverted into Reagor’s personal account. Reinhart may also testify about the daily Skype meetings.
According to the federal indictment against Bart Reagor, in the first quarter of 2017, one of Reagor Dykes’ floorplan lenders conducted an audit that placed the auto group in a weak cash position.
In order obtain cash to continue operations, D & R Acquisitions, a limited liability company formed to hold Reagor Dykes’ real estate assets, entered into a loan agreement with International Bank of Commerce (IBC). The agreement included a $10,000,000 working capital loan, which was distributed by IBC to D&R in two tranches: $5,000,000 in July 2017 and another $5,000,000 in February 2018, to be disbursed to the various RDAG entities.
However, in applying for the loan, Reagor allegedly misrepresented its purpose, concealing from IBC the fact that he planned to divert some of the proceeds from the working capital loan into his own personal account for personal expenses. (The loan agreement expressly prohibited Reagor and others from diverting loan proceeds to their personal bank accounts, and IBC would not have approved the loan if Reagor or anyone else had disclosed to IBC that some of the loan proceeds would be diverted to Reagor’s personal bank accounts.)
In total, the U.S. Attorneys Office says Reagor diverted more than $1.7 million to his personal account at Prosperity Bank -- $766,277 in July 2017, following IBC’s disbursement of the first tranche of money, and $1 million in February 2018, following IBC’s disbursement of the second tranche of money.
Last week, Reagor filed a motion to dismiss the federal fraud charges against him. The prosecution replied to the motion and asked the court to deny the request. Judge Matthew J. Kacsmaryk has not made a decision on that motion.
Copyright 2021 KCBD. All rights reserved.