Reagor and Dykes argue if Ford Credit was complicit in fraud, two men not responsible for $109 million+
Bart Reagor and Rick Dykes are entitled to defend themselves, a new legal filing states. It also includes depositions from Ford Credit employees.
Bart Reagor and Rick Dykes are entitled to defend themselves in Ford Credit's lawsuit. The argument is made in the latest filing in Ford Credit's lawsuit against the two men. Ford Credit first filed suit July 31 against the Reagor-Dykes Auto Group and its two principals. Following bankruptcy proceedings, the suit has been amended to list only Reagor and Dykes as defendants.
Legal representation for the two men filed a brief supporting a motion to delay Ford Credit's request for summary judgment. There have been multiple filings from both sides over the past few weeks. Ford Credit is seeking summary judgment, where the judge would rule in its favor because of evidence presented, without going through a full trial. It claims Reagor and Dykes are personally responsible for more than $109 million.
As part of the discovery process in this suit, Wednesday's filing states Reagor and Dykes "seek discovery to determine if Shane Smith was a rogue, lone wolf, or whether Ford Credit, through its operations, was complicit in Smith’s scheme. If Ford Credit was complicit, Reagor and Dykes contend that the guaranty agreements are void."
This latest brief also provides a portion of a deposition of Ford Credit regional manager Gary Byrd, taken in the related bankruptcy proceedings. Previous filings from the defendants claimed Byrd maintained a close relationship with Smith, Reagor-Dykes' chief financial officer until August 2018. Ford Credit has rejected statements that Bryd may have been responsible for fraud. From Wednesday's filing:
"For example, in the deposition of Gary Byrd, (Shane Smith’s primary contact), Ford Credit refused to permit Byrd to testify to the following relevant information:
Q. And did you go to school together [with Shane Smith]?
Mr. Langley: We’re not going to go further into these areas. They don’t relate to the issues before the bankruptcy court tomorrow.
Q. Have you ever – you and Mr. Smith socialized together?
Mr. Langley: We’re not going to respond to any such question that don’t relate to the cash source and uses or the collateral positions of Ford Credit. [Doc. 34, App. 8]
Q. Have you and Mr. Smith, within the last two years, traveled or vacationed together?
Mr. Langley: We won’t respond to any such questions today. [Doc. 34, App. 8]
Q. When was the first time you talked to Mr. Smith about the double-flooring of vehicles?
Mr. Langley: Instruct the witness not to answer. [Doc. 34, App. 8]
Q. Is it – the quarterly audit – is that standard for Ford Motor Credit on dealerships, or is it – is that unusual?
A. That’s proprietary information, and I don’t think I need to discuss that. That’s confidential to my company on how we audit dealers.
Q. So you’re refusing to answer that one.
Mr. Langley: I’m instructing him not to answer. [Doc. 34, App. 13]
Q. Wouldn’t – wouldn’t you have been the person responsible at Ford Motor Company (sic) to determine whether these audit results that were – you received showing the 225 vehicles had been sold off the Floydada lot in seven business days prior to the audit, whether that was a red flag of fraud?
Mr. Langley: Objection. He’s not going to answer. I instruct the witness not to answer this. [Doc. 34, App. 17]
Q. Well, my question is: Did you or anyone else at Ford note that a sale of 225 units off of the Floydada lot in the seven business days before June 28th would be a sale of practically the entire inventory of the lot?
Mr. Langley: Don’t respond. [Doc. 34, App. 18]3
Q. Has Ford Credit made any demand upon that auditor in connection with the audits they performed?
Mr. Langley: We’re going to object to that question. And I’ll instruct the witness not to go into any of those areas. [Doc. 34, App. 20]
Q. Before July 28th of this year, when was the last time you had spoken with Shane Smith?
Mr. Langley: Objection, I’m going to instruct the witness not to answer. A. I’m going to follow his advice.
Q. Did you and Mr. Smith used to work together at Ford Motor Credit?
Mr. Langley: Objection, Instruct the witness not to answer. [Doc. 34, App. 20]
Q. How of the would you normally have occasion to email Mr. Smith?
Mr. Langley: I’m going to instruct the witness not to answer. [Doc. 34, App. 21]
These excerpts reveal that Reagor and Dykes have not had the opportunity to take
discovery related to the Byrd-Smith relationship and/or their communications (other than some testimony related to the July 2018 emergency audit), the June 2018 audit, any “red flags,” or Ford Credit’s audit policies. Given the sudden shift from “fantastic results” to alleged massive fraud, Reagor and Dykes should be permitted to depose Ford Credit employees and obtain their relevant documents.
Reagor and Dykes' latest filing also questions the method used to calculate amount owed, citing another deposition of a Ford Credit employee.
This brief also rejects Ford Credit's assertion that either individual may liquidate or get rid of assets to avoid potential judgment. Instead, Reagor and Dykes' filing states both men have loaned money to keep the Auto Group operating. "To the contrary, they have used personal funds in an effort to assist their companies in bankruptcy." It also states Reagor has had "hundreds of thousands of dollars seized by the United States government".
Filing Wednesday on behalf of Bart Reagor and Rick Dykes:
Earlier filing from Ford Credit:
JAN. 31: Reagor-Dykes seeks appeal of Bankruptcy Judge's order
JAN. 31: McDougal no longer involved in Reagor-Dykes re-organization effort
JAN. 28: Nearly 6 months later, hundreds of Reagor-Dykes customers still in limbo
JAN. 23: FirstCapital Bank allows Reagor-Dykes to use cash collateral
JAN. 18: Future uncertain for Reagor-Dykes Auto Group after recent ruling
JAN. 17: Judge: Ford Credit may repossess Reagor-Dykes vehicles
JAN. 9: Court approves Reagor-Dykes interim funding
JAN. 8: Reagor-Dykes, Ford Credit argue future of Auto Group in bankruptcy court
JAN. 8: Citing possible criminal investigation, former Reagor-Dykes CFO requests stay on discovery
JAN. 8: Ford Credit: Reagor, Dykes signed guaranties, should pay $112 million+ in relief
JAN. 7: Reagor-Dykes files reorganization plan
JAN. 7: 'Reagor-Dykes is not dead', Auto Group files response to Ford Credit's demands
JAN. 4: With no reorganization plan yet filed, Ford Credit seeks to take possession of Reagor-Dykes vehicles
JAN. 3: Lender asks bankruptcy court to force Reagor-Dykes legal team to produce documents
DEC. 26: UPDATE: Court allows Ford Credit lawsuit to proceed against Bart Reagor, Rick Dykes
DEC. 12: Slow progress reported on Reagor-Dykes customers' TT&L, trade-ins
NOV. 29: McDougal, Ewing and Dykes lead group to purchase Reagor-Dykes assets
NOV. 21 Former Reagor-Dykes CFO requests change of venue in lawsuit
NOV. 20: Toyota, GM file objections in Reagor-Dykes bid process
NOV. 14: State may extend titles for some Reagor-Dykes customers
NOV. 2: Five more Reagor-Dykes entities petition for bankruptcy
OCT. 29: Reagor-Dykes TT&L, trade-in issues remain unresolved; progress reported with some lenders
OCT. 29: Bart Reagor, Reagor Auto Mall claim First Bank & Trust party at fault
OCT. 29: Vista Bank asks to recoup funds in Reagor-Dykes accounts
OCT. 18: No resolution yet on Reagor-Dykes customers' unpaid TT&L, trade-in liens
OCT. 17: More lenders object to Reagor-Dykes' request for TT&L, trade-in payment
OCT. 16: U.S. Bank objects to Reagor-Dykes request for lenders to pay TT&L, trade-ins
OCT. 15: Compromise on vehicles in First Bank & Trust lawsuit v. Reagor Auto Mall
OCT. 15: Judge approves sale of Reagor-Dykes plane; Wells Fargo objects to portion of TT&L motion
OCT. 12: Ford Credit supports part of Reagor-Dykes' request for lenders to pay TT&L, trade-ins
OCT. 12: FirstCapital files counterclaim, motion to dismiss
OCT. 10: Reagor-Dykes aircraft to be sold, pending court approval
OCT. 10: Several filings in Reagor-Dykes bankruptcy case
OCT. 1: KamKad, Reagor-Dykes execute purchase agreement
SEPT. 24: FirstCapital Bank requests First Bank & Trust lawsuit against it, Reagor-Dykes, others move to federal court
SEPT. 21: Judge sets schedule, trial date in Vista Bank v FirstCapital Bank lawsuit
SEPT. 21: Former Reagor-Dykes CFO denies late payments, says Vista Bank attacked him, his family
SEPT. 20: Vista Bank sues former Reagor-Dykes CFO, claims loan default
SEPT. 19: Texas DMV: Reagor-Dykes should promptly resolve title issues
SEPT. 19: Brad, Kenneth Burgess file motion to dismiss Vista Bank lawsuit
SEPT. 18: First Capital Bank files motion to dismiss lawsuit
SEPT. 18: Court approves bid process for Reagor-Dykes Auto Group, extends use of cash collateral
SEPT. 17: Ford Credit, GM object to certain aspects of proposed Reagor-Dykes sale
SEPT. 14: Judge sets trial date in Ford Credit lawsuit vs. Reagor-Dykes
SEPT. 14: Reagor denies Ford Credit's claim vehicles sold out of trust
SEPT. 13: Dykes: Former Reagor-Dykes CFO admits he provided false info to Ford Credit
SEPT. 11: Reagor-Dykes Auto Group requests court to allow sale of company
SEPT. 4: Reagor-Dykes Auto Group establishes process to resolve customer problems
AUG. 31: International Bank of Commerce asks for court to allow it to foreclose on Reagor-Dykes dealerships
AUG. 31: More Reagor-Dykes companies, co-owners may soon file for chapter 11
AUG. 30: Court extends Reagor-Dykes employment of CRO; officer discusses potential dealership buyers
AUG. 29 : International Bank of Commerce asks for loan payment in Reagor-Dykes case
AUG. 29: Ford Credit objects to Reagor-Dykes earlier legal team
AUG. 27: Vista Bank doubles relief request in new federal suit against FirstCapital Bank
AUG. 25: Reagor-Dykes chief restructuring officer hires new legal team
AUG. 25: GM proceeding with termination of Reagor-Dykes Floydada
AUG. 23: Landlords demand rent for Reagor-Dykes dealerships in Lubbock, Plainview
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