LUBBOCK, Texas — Annette Reagor, wife of Bart Reagor, filed a lawsuit against FirstCapital Bank of Texas on April 22. The lawsuit asked for at least $2.3 million and up to $22.3 million in damages from the bank.
The lawsuit, filed in the 97th Judicial District of Texas, claimed that FirstCapital defrauded the Reagor’s. Specifically, the lawsuit claimed the Reagor’s pledged $2.3 million in assets to FirstCapital in August 2018 for financing.
“Unbeknownst to the dazed Mr. Reagor, however, FirstCapital’s promise of refinancing was knowingly false and merely a ‘money-grab’ by the greedy Defendant,” the lawsuit said.
The lawsuit said FirstCapital also worked with former Reagor Dykes Auto Group CFO Shane Smith to defraud the Reagor’s. Smith was sentenced to seven years in prison in January 2022 after pleading guilty to conspiracy to commit wire fraud.
The lawsuit claimed FirstCapital knew about Smith’s check-kiting scheme and enabled it to collect overdraft charges from RDAG.
Check kiting is a form of bank fraud. It involves passing checks back and forth between banks to make an account look like it has more value than it does.
The lawsuit claimed if FirstCapital had stopped honoring overdrawn checks that the kite scheme would have collapsed and spared Reagor and his family “the ensuing catastrophe they were soon to endure.”
FirstCaptial Bank responded to EverythingLubbock.com’s request for comment on the lawsuit.
“We believe Mrs. Reagor’s frivolous claims are without merit and intend to vigorously defend the lawsuit,” a spokesperson for the bank said.
In an affidavit written by RDAG co-owner Rick Dykes, Dykes said on one occasion in late 2017 or early 2018, the CEO of FirstCapital, Brad Burgess, mentioned on, certain days, the operating account for an RDAG store would be overdrawn with a negative balance at the end of the day. However, a deposit would be made by noon the next day to fix the negative balance.
Dykes said he asked Smith for an explanation and dropped the issue when Smith was able to give him a reasonable answer for what was going on.
Smith wrote in an affidavit that one of the four reasons RDAG had insufficient cash to cover normal operations was “large payments over many years RDAG had been making to Bart Reagor and Rick Dykes.”
Smith said the other three reasons included expenses resulting from rapid growth, the high volume of sales with large cash commitments and normal delays in receiving funding from transactions.
Additionally, Smith said, at one point, RDAG applied for and received loans from both Ford Motor Credit Company and the International Bank of Commerce. When asked about the loan, Smith said all the proceeds were being used for working capital when, in fact, over $3.5 million was diverted to make payments to Reagor and Dykes, as well as pay bonuses for several RDAG employees, including Smith.
In 2021, Reagor was found guilty on one count of making a false statement to a bank and sentenced to 14 years in prison.
To read the full lawsuit, click here.