Vista Bank doubles relief request in new federal suit against Fi

Vista Bank doubles relief request in new federal suit against FirstCapital Bank

Posted: Updated:
LUBBOCK, Texas -

Vista Bank filed to drop its state lawsuit against FirstCapital Bank and filed in federal court Monday, asking for more than $12 million in relief from a check kiting scheme it claims was perpetrated in part by Rick Dykes, according to court filings.

The federal suit claims it is arising from FirstCapital "knowingly facilitating and supporting the continuation of a multi-million dollar check kiting scheme initiated by the Reagor-Dykes entities to enable FirstCapital to continue to collect fraudulent deposits, while actively pushing fraud losses onto Vista through a system of mass check returns."

Vista is filing to recover "damages maliciously inflicted by FirstCapital and the Burgess Brother Defendants through improper use of non-public, material inside information."

The lawsuit claims FirstCapital obtained insider knowledge through a close relationships with Rick Dykes -- co-owner of the Reagor Dykes Auto Group and a former FirstCapital board member -- and directly benefited from the continuation of the Reagor-Dykes check kiting scheme at Vista's expense.

The court filing asserts Reagor-Dykes used "its close relationship and multiple accounts with FirstCapital to execute a massive check kiting scheme," using serial multi-million-dollar deposits among its accounts.

Further, the suit claims FirstCapital exploited its special insider relationship with Dykes to improperly shift the scheme's fraud onto Vista. 

"Reagor-Dykes wrote multi-million dollar checks from FirstCapital accounts," the filing indicates, "deposited these checks into Vista accounts, and then issued payments from the Vista accounts based on their deposits to cover obligations or make deposits to their accounts at another financial institution."

"In doing this," the filing continues, "Reagor-Dykes obtained millions of dollars in unauthorized credit from Vista during the 'float' period while Vista completed the cash letter process with the Federal Reserve and waited for FirstCapital to fund the deposited items."

The filing suggests FirstCapital Bank worked around the Reagor-Dykes bankruptcy filing -- which would have interrupted the scheme, the filing indicates -- by using its insider access to Rick Dykes to channel more than $6 million in losses and damages to Vista, allowing FirstCapital to "knowingly profit from the scheme by continuing to accept funds from fraudulent deposits while implementing mass returns and chargebacks onto Vista."

The filing claims FirstCapital and the Burgess Brother defendants -- CEO Brad Burgess and Chairman Kenneth L. Burgess, Jr. -- "systematically targeted Vista with a flood of irregular returned and unpaid Reagor-Dykes items."

Acting on "the damning inside information," the filing suggests, "FirstCapital, at the direction of the Burgess Brother Defendants, blew up the standard process and 'worked all night' in a greedy attempt to ram return items onto Vista." 

The filing shows, on August 2, 79 items totaling $5,536,111.63 were returned and unpaid due to "uncollected funds hold." FirstCapital had never returned a single Reagor-Dykes item to Vista for nonpayment, the filing notes.

Vista Bank claims the return shows:

  1. FirstCapital began processing the return of these items well-before Reagor-Dykes bankruptcy filing the morning of August 1, and the use of manual return alone shows "evidence of FirstCapital engaging in extraordinary efforts to hit Vista with return losses;"
  2. FirstCapital initially approved the late returns from July 27, but "frantically reversed the course" following the meeting with Rick Dykes late on July 31;
  3. FirstCapital is the only banking institution Reagor-Dykes used that submitted return letters on August 1 and attempted to charge back items from July 27;
  4. Dykes admitted to Vista's counsel that FirstCapital's team did in fact "work all night" on July 31 and August 1 to accelerate and process the returns to Vista.

Vista requests a trial by jury.


AUG. 25: Reagor-Dykes chief restructuring officer hires new legal team
AUG. 25: GM proceeding with termination of Reagor-Dykes Floydada
AUG. 20: Ford Credit moves ahead with suit against Reagor, Dykes, some R-D companies
AUG. 18: Reagor-Dykes bankruptcy case: Read court order following Aug. 16 hearing
AUG. 17: Auto dealer claims Reagor-Dykes owes $513,000, vehicles may be in consumers' possession
AUG. 16: Vista Bank sues FirstCapital for $6 million, claims Dykes helped perpetrate check kiting scheme
AUG. 16: Bankruptcy court allows Reagor-Dykes continued use of cash collateral, hiring of CRO
AUG. 15: Reagor-Dykes Auto Group issues written apology
AUG. 14: Loss of Reagor-Dykes Chevrolet in Floydada a potential financial pitfall for city
AUG. 14: Vehicle auction company claims Reagor-Dykes owes it $687,000
AUG. 14: Ford Credit claims Reagor-Dykes is not following court orders; court grants extension to file docs
AUG. 13: 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

Powered by Frankly