Jury dismissed for day in Bart Reagor bank fraud trial, “no way we can be unanimous”

AMARILLO, Texas (KCBD) - Closing arguments began Thursday morning in Bart Reagor’s bank fraud trial at the Amarillo Federal Courthouse. As of 10:18 a.m., the case was handed to the jury. By 4:50 p.m., Thursday afternoon, the jury was deadlocked and continuing deliberations into the evening. An hour later, the jury was dismissed, sending a note to the judge saying “there’s no way we can be unanimous. Can we at least be dismissed for the day.”

Jury will return to deliberations at 10 a.m., Friday.

If he is convicted, Reagor faces up to 90 years in federal prison.

Bart Reagor is on trial for charges including bank fraud. Specifically, he is accused of illegally keeping part of a business loan for himself. Federal prosecutors claim Reagor violated the loan agreement when he moved nearly $2 million out of a $10 million note into his personal account.

Today’s proceedings began with Judge Matthew Kacsmaryk entering at 8:15 a.m. He finalized the jury charge and brought in the jury at 8:18 a.m. The judge then read the jury charge to them, concluding at 8:43 a.m.

Each side was given 45 minutes for closing. The government told the judge it would reserve 15 minutes for rebuttal.

Closing arguments began with the prosecution at 8:45 a.m. by Assistant U.S. Attorney Jeffrey Haag. He began by telling the jury federal cases tend to become more complex than needed, especially with a white-collar crime. He said he would try to reorient as to why the jury was here and talk about what’s at issue.

He then explained the bank fraud and the false statement charge. He asked the jury to “please remember” this is a fraud case and asked them to write that down. He explained that is a planned pattern for the course of action intended to deceive others.

Haag said the defendant falsely represented to IBC the purpose of the loan, saying it was for RDAG to operate and omitted the material fact he intended to divert a portion to himself for personal use and benefit.

The prosecution laid out the time period starting with an April 2017 meeting Reagor was in with IBC. Haag said the loan agreement was signed on July 13, 2017.

A loan memorandum was dated April 14, 2017, and captured the representations at the time between those dates. Haag said those were that RDAG needed $10 million to inject equity into RDAG to keep up with growth because working capital was inadequate. The loan would be an immediate cash injection to meet growth goals. IBC was told the owners of RDAG eliminated all withdrawals from the company in March of 2017.

Haag laid out what Reagor did not tell IBC: that only $6.6 million of the loan would go to RDAG. Haag said that is backed by testimony from the president and CEO of IBC, IBC’s VP at the time, and Shane Smith.

The jury was then presented again with an email on May 31, 2017, from Reagor to Shane Smith and Rick Dykes, his plan to divert the money and hide that plan.

The email is sent six weeks before the signing of the agreement. Prosecutors said Reagor knew Shane Smith would follow those instructions and Rick Dykes had $1.7 million reasons to not question the plan. (He also received a portion of the loan.) Haag then showed a portion of Smith’s reply to those instructions, which included his statement that all he’s worked toward is enriching their lives and net worth and that he would “have your back.”

Haag pointed out the email did not include Steven Reinhart, Rachel Reagor, and John Thompson, all legal and compliance for RDAG. It also didn’t include IBC.

Prosecutors said Reagor only shared the plan with those who would blindly obey him and omitted anyone who would tell him it was wrong.

The prosecution then turned to the defense’s argument or proposed justification. That includes that Reagor invested his own money into RDAG and that he believed the portion of the loan would be reimbursed.

Haag said evidence shows that in March of 2017 he only invested $500,000 and owed RDAG $5.4 million. Haag called it a “sham” that he would need reimbursement.

Haag turned to the action of concealment, going back to the email in which Reagor titled “handling capital.” In it, he said it was “confidential between us” and “nobody’s business” including “no bankers.”

Haag said, “if you got to hide it, you shouldn’t be doing it.” Haag continued by saying Reagor knew it was wrong and told the bankers it was for RDAG when he used it on his “mansion on 19th street.”

Haag argued the defendant’s motives were clear and played again for the jury an audio clip of Reagor and video from a meeting with sales staff. In them, he brags about his wealth and using “other people’s money.” Haag said that shows his view of himself is tied to his net worth and why he diverted the loan to himself.

Haag ended his arguments by telling the jury why the lie matters. He said it mattered to IBC. He reminded the jury of the bank’s president’s testimony that he would have not approved the loan if he knew it would be used personally.

Haag said the verdict required by the evidence is guilty.

The government ended its initial closing arguments at 9:13 a.m.

Dang Cogdell, attorney for Bart Reagor, began the defense’s closing arguments at 9:15 a.m.

He began by telling the jury that a verdict of not guilty does not mean they like Bart Reagor, like the way he treated people, that they would have done something like he did but that it does mean the prosecution failed to prove its case.

Cogdell turned to explain the presumption of innocence, that the indictment is not proof of guilt. He said the burden of proof is on the government to prove the case beyond a reasonable doubt.

He told the jury that “working capital” wasn’t defined but “proof beyond a reasonable doubt” is.

He again reminded them that “not guilty” is not a bad thing.

Cogdell said that Shane Smith being the pilot of your plane, the director of an Alzheimer’s Center or your cardiologist is reasonable doubt.

Cogdell told the jury there are two ways to try a case. He said the government tried it by emotion because there was a lack of facts.

He turned to the May 13, 2017 email, the audio and video clip. He said that was shown and played to play to the jury’s emotions.

Cogdell said the prosecutors had three years to investigate the case and, “this is the proof?”

Cogdell told the jury that “we don’t convict because we dislike.”

He reminded the jury of testimony from the contract law professor Frank Snyder. Cogdell told the jury that if they believed Snyder, there is no choice but to acquit. Cogdell said Snyder’s testimony showed Reagor was qualified to take a portion of the loan because there was no evidence of default or that it would trigger a default, that working capital can be used as reimbursement for investment and the loan agreement said he could do it.

Snyder said in his testimony that he would have told Reagor he could “go ahead” with taking a portion of the loan.

The defense then argued in its closing the prosecution gave no rebuttal after the defense rested its case, meaning the defense’s case was a “kill shot.”

Cogdell said the “bottom line” was that there is reasonable doubt because of the definition of working capital, that Reagor believed he could use the loan as repayment.

He reminded the jury that Rick Dykes got a portion of the loan like Reagor. He said there was no evidence that anyone told Reagor “you can’t do this.”

Cogdell argued the email used by the prosecution was only sent by Reagor because he wanted privacy for business reasons.

The defense said Reagor had no reason to believe RDAG was in bad shape and that Reagor invested more than the prosecution claims.

If he believed he could take a portion of the loan, there is no bank fraud, according to Cogdell.

The closing argument then turned to Shane Smith. Cogdell said Reagor relied on him and trusted his employees. Cogdell said it was ironic that it was not the conduct of Reagor that “destroyed” RDAG but it was Shane Smith and he testified against Reagor.

Cogdell told the jury that Smith’s reply to the email, which began with “awesome” showed he agreed with the distribution and he couldn’t tell Reagor no because he was leading the ongoing floor plan fraud and check-kiting scheme.

Cogdell said Reagor never asked Smith to submit false documents to IBC and that he acquitted Reagor in his testimony.

Cogdell then went on to call Smith a “horrible human being” who Reagor relied on, telling the jury “if you rely on him, you will get burned by him too.”

Cogdell said the “government has failed.” He closed by adding even if Reagor was wrong, there’s no evidence he knowingly committed fraud.

Then he told the jury that Reagor is a father, grandfather, husband that has done so much for others. Cogdell said he was giving Reagor to them, pointed to each jury member, and asked for them to “give him back to me,” adding “he’s not guilty of these crimes.”

The defense’s closing arguments ended at 10 a.m.

Rebuttal by the government began at 10:02 a.m. with Haag saying the defense’s strategy has been designed to confuse them.

Haag said an example is with Shane Smith, that his testimony is only supplemental to the relevant facts.

Haag later went to the testimony by Frank Snyder, saying that he said is irrelevant to the fraud case. Haag explained the fraud was committed after the April 2017 meeting with IBC and before the deal was signed. While Snyder said the agreement allowed the disbursement, that’s a breach of contract, not the fraud, according to Haag, the fraud was in obtaining the loan.

The government argued if Reagor would have been honest with IBC about his intentions with the loan, there would have never been an agreement.

Haag moved to the testimony by Charles Darter, Reagor’s CPA. Haag told the jury his testimony actually supported the fraud case. Darter testified in March of 2017, after the audit by Ford Motor Credit, Darter told Reagor working capital was needed to make RDAG healthy.

Haag closed by saying Reagor didn’t need to look at any documents to know what he did was wrong. Haag told the jury that if someone tells the bank they need a loan for a business, you need to use it for the business.

Haag said the defendant lied, it was a material lie, he developed a scheme to hide it and had Shane Smith execute it. Haag ended by saying Reagor is guilty.

The rebuttal ended at 10:14 a.m.

The judge then dismissed the alternate jurors. At 10:18 a.m. the jury returned to its room and began deliberations.

On Wednesday, the defense laid out its case saying Reagor did nothing wrong. They claimed the International Bank of Commerce (IBC) did not define “working capital” in the loan agreement. That term has been a source of debate in this trial.

Financial experts testified for the defense saying their definitions of “working capital” covers that reimbursement since it was still considered a part of doing business.

Reagor’s personal accountant testified saying the IRS accepted that $1.7 million as “capital” for tax purposes.

Defense attorneys did not call former co-owner Rick Dykes to the stand as previously indicated in court records.

On Monday, the jury was selected, and testimony began on Tuesday with opening statements. Later in the day, Shane Smith, the former financial officer for Reagor Dykes Auto Group took the stand. Smith was on the stand for about three and a half hours.

MORE: REAGOR DYKES COVERAGE

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