LUBBOCK, Texas — The bankruptcy estate of Reagor Dykes filed a complaint Wednesday saying, among other things, that Ford owes $315 million to the estate.
Lubbock-based Reagor Dykes filed for bankruptcy on August 1, 2018. The company was accused of fraud and default. Numerous court filings accused Reagor Dykes of falsifying sales records to make it look like no money was owed to Ford Motor Credit Company at times when money was owed.
The estimates have varied but Ford at one point said it loaned $116 million to Reagor Dykes and more than $40 million of vehicles were sold “out of trust.”
Reagor Dykes was also accused of a specific form of bank fraud called check kiting.
The bankruptcy case remained pending as of Wednesday. The most recent plan put forth in court records is to liquidate what little is left and distribute the proceeds to the creditors.
Shortly after the bankruptcy filing, Bart Reagor and Rick Dykes were no longer in control of daily operations. Instead a Chief Restructuring Officer was appointed by the court.
Several former employees of Reagor Dykes admitted to committing federal crimes including former Chief Financial Officer Shane Smith who admitted to conspiracy to commit wire fraud. Smith has not yet been sentenced.
The New Claims:
The estate claims that Ford’s employee, Gary Byrd, knew what was going on and let it happen anyway. Ford would conduct surprise audits, and the estate said in the newest court filing that there were obvious signs of trouble.
As just one example, the Reagor Dykes Floydada location was said to have sold more than $6.3 million of vehicles in the week before a March 2018 Ford audit – which was more than 90 percent of the Floydada inventory.
The surprise audits were not a surprise at all, according to the newest complaint. Previously filed criminal records said the FBI came to the same conclusion. The audits were not really a surprise.
“Byrd had a personal and professional relationship with Smith since the early 2000s
when they worked together at FMCC [Ford Motor Credit Company],” the complaint said.
One part of the complaint said:
FMCC’s affiliate, Ford Motor Company, profited handsomely from Reagor-Dykes’ robust sales, and FMCC received repayment of principal and tens of millions of dollars in interest payments. Even though FMCC knew or should have known that Reagor-Dykes’ sales figures were falsified, FMCC did not inquire or investigate the source of the large influx of cash for the payoffs. As detailed below, these catchup payments were made, in substantial part, with funds from new fraudulent loans and check kiting. Reagor-Dykes made payments to FMCC knowing that other creditors and consumers would be harmed when its scheme inevitably collapsed, and FMCC accepted the fraudulent funds in spite of what FMCC knew or should have known.
The complaint said, “Debtors [the estate of the various Reagor Dykes companies] are entitled to avoid and recover from FMCC over $315 million of transfers made to FMCC within the two years prior to bankruptcy.”
More specifically, that would be $315,429,217.16.
Ford has not yet responded in court records.