Bank Reagor, electronic fraud trial begins on Monday

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Jurors are expected to be selected today in the fraud trial of Bart Reagor, the former CEO of Reagor-Dykes Auto Group.

Reagor, who is on bail, is charged with two counts of bank fraud and one count of misrepresenting a bank. If found guilty, he faces up to 90 years in prison.

He is accused of illegally transferring approximately $ 1.7 million from a $ 10 million bank loan from the International Bank of Commerce to his personal bank account.

Reagor’s trial was scheduled to begin on Tuesday, however, on Thursday last week, U.S. District Judge Matthew J. Kacsmaryk issued an order advancing the trial by one day.

Once seated, jurors are expected to hear evidence and testimony that prosecutors say will show Reagor intentionally withheld his intention to transfer money, described as “working capital” to his personal account.

“IBC would not have approved the loan if Reagor and others had revealed to IBC that part of the loan proceeds would be diverted to Reagor and others’ personal bank accounts and used for personal expenses,” reads one in the indictment against Reagor.

To show Reagor acted intentionally, prosecutors plan to show jurors video clips of RDAG meetings in which Reagor bragged about his wealth and used “other people’s money” to increase his net worth.

However, Kacsmaryk has banned the government from showing jurors excerpts from other meetings in which Reagor claims that nothing he has done is an accident and that he “does what he wants.” This evidence could be admitted if prosecutors were to challenge the testimony of a witness.

Meanwhile, Reagor’s defense attorneys are expected to argue that their client had no intention of defrauding the bank when he embezzled part of the $ 10 million loan from his personal bank account.

Reagor Dykes Auto Group headquarters, Thursday, October 25, 2018, in Lubbock, Texas.

According to their trial brief, Reagor’s lawyers should argue to jurors that Reagor’s deal with IBC did not prevent him from taking part of the IBC loan and depositing it into his personal account to repay himself the money he he had put in the business to fill the gaps in a disappointing floor plan audit.

Government witnesses include former RDAG CFO Shane Smith and former legal and compliance manager Steven Reinhart.

Smith is expected to brief jurors on the dealership’s financial distress after an audit of the 2017 floor plan, the purpose of the IBC loan, and how Reagor asked him to distribute the money.

Reagor Dykes Auto Group headquarters, Thursday, October 25, 2018, in Lubbock, Texas.

Smith and Reinhart and 13 other former RDAG employees have pleaded guilty to their role in a massive fraud scheme to defraud Ford Motor Credit of millions of dollars.

Ford Motor Credit Co. in July 2018 filed a lawsuit against the dealership to get the money owed to it after discovering the fraud. A day later, RDAG filed for bankruptcy.

A subsequent criminal investigation uncovered a massive combination of checkout and floor plan fraud schemes that resulted in electronic and bank fraud charges against 15 RDAG employees.

Smith and Reinhart are the only defendants in this case still awaiting sentencing. Sentencing hearings for the two men are scheduled for December.

In 2019, a 12-person jury deliberated in Federal Court in Lubbock for less than an hour before delivering a verdict ordering Reagor to pay $ 53,759,450.96, the full amount Ford Credit claimed was owed to him.

However, the judge’s order bars lawyers in Reagor’s trial from mentioning civil and criminal cases arising from the Ford Motor Credit fraud case.

Reagor’s business partner Rick Dykes also participated in IBC’s loan application and also received part of the loan. He has not been charged with any crime and is listed as a witness for Reagor. Dykes would have to tell the jurors that there was no fraudulent intent when they applied for the loan.

The judge’s orders also bar lawyers from mentioning that Dykes is not facing criminal charges.


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