UPDATED: FirstCapital denies Vista Bank's allegations, claims Vi

UPDATED: FirstCapital denies Vista Bank's allegations, claims Vista is weaponizing judicial system

Posted: Updated:
LUBBOCK, Texas -

FirstCapital Bank responded to serious allegations leveled by Vista Bank, claiming through a law suit Vista is "weaponizing the judicial system by asserting claims untethered to the law".

In FirstCapital's filing, it states Rick Dykes made an unsolicited phone call then visit to the bank with attorney David Langston late on July 31. The court document identifies Dykes as a non-voting FirstCapital advisory board member.

Dykes and Langston informed FirstCapital of issues surrounding Reagor-Dykes' floor plan financing and that Ford claimed it was owed roughly $39 million, according to Thursday's filing.

On July 31 Ford Motor Credit filed suit against Reagor-Dykes companies. Aug. 1 several, but not all, entities named in the suit filed for chapter 11 bankruptcy protections.

It continues, "In the late [July 31] evening meeting, there were also discussions that Reagor Dykes' chief financial officer might be "kiting" Reagor Dykes checks". When requesting the hiring of a chief restructuring officer last week, Reagor-Dykes pointed to potential wrongdoing by its "former" chief financial officer. At the time of last week's filing, Shane Smith was listed as the CFO on the R-D website. He is no longer listed on the site

FirstCapital states it reacted like other banks around Lubbock did, dishonoring and returning checks. "At or around that time, Vista Bank also began dishonoring checks to protect its interests."

FirstCapital's filing states it acted within sound banking principles and practices. Responding to allegations in the lawsuit, "if Vista Bank believes there is an issue with the timeliness of the rejection of these checks, Vista Bank may pursue the process available through the Federal Reserve."

"Far from acting on insider, non-public information - - which has no legal application in this setting anyway - - FirstCapital followed regular banking procedures to dishonor and return the checks presented for payment on July 31st and August 1st."

Further dismissing Vista's allegations, FirstCapital's response states "FirstCapital denies any knowledge that Reagor Dykes was engaged in a check kiting scheme until it was brought to FirstCapital's attention on July 31st, but even if it were aware it has no duty to inform Vista Bank. In fact, the correct course of action upon discovering a check kite is to do exactly as FirstCapital did -- freeze accounts and return checks."

FirstCapital issued this statement Thursday evening:

“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.”

RELATED THURSDAY: Vista Bank sues FirstCapital for $6 million, claims Dykes helped perpetrate check kiting scheme
RELATED THURSDAY: Bankruptcy court allows Reagor-Dykes continued use of cash collateral, hiring of CRO
WEDNESDAY: Reagor-Dykes Auto Group issues written apology
TUESDAY: Loss of Reagor-Dykes Chevrolet in Floydada a potential financial pitfall for city
TUESDAY: Vehicle auction company claims Reagor-Dykes owes it $687,000
TUESDAY: Ford Credit claims Reagor-Dykes is not following court orders; court grants extension to file docs
MONDAY: U.S. Trustee opposes Reagor-Dykes request to hire chief restructuring officer
AUG. 10: Ford Credit: Reagor-Dykes fraud may be among largest of its type in U.S. history; GM files to terminate Floydada dealership
AUG. 9: Reagor-Dykes questions former CFO’s actions; Contractor claims $700,000 due now
AUG. 7: Former Reagor-Dykes employees claim they were not paid
AUG. 6: Customers concerned over Reagor-Dykes 'unwinding' process
AUG. 6: Ford suit against Reagor-Dykes on hold while bankruptcy case proceeds
AUG. 3: Judge approves Reagor-Dykes employee pay
AUG. 2: Mayor: Downtown Lubbock growth to remain strong regardless of Reagor-Dykes future
INITIAL STORY: Ford Motor Credit sues Reagor-Dykes; R-D files for chapter 11 bankruptcy

Here is FirstCapital's response:

Powered by Frankly