Reagor Dykes CFO sentenced to 7 years in prison for wire fraud conspiracy | USAO-NDTX

Reagor Dykes Auto Group Chief Financial Officer Shane Andrew Smith was sentenced today to seven years in federal prison for his role in a $50 million wire fraud conspiracy, the U.S. Attorney for the Northern District of Texas announced. , Chad E. Meacham.

Mr. Smith, 45, pleaded guilty in June 2019 and was sentenced on Thursday by U.S. District Judge Matthew J. Kacsmaryk, who also ordered him to pay $59,590,198.82 in restitution. The accused must report to the prison before 2 p.m. on Monday, March 28.

“At the time Mr. Smith was indicted in 2019, Reagor Dykes was a cesspool of criminal schemes, from check kiting to false flooring,” U.S. Attorney Chad Meacham said. “We are proud of the work we have done to hold this defendant – and more than a dozen of his colleagues – accountable for their egregious behavior.”

“As a corporate executive, Mr. Smith meticulously conspired to defraud a lending institution, and the resulting loss to the industry was significant,” said Matthew DeSarno, special agent in charge of the division. of Dallas from the FBI. “One of the FBI’s goals is to investigate fraud and protect public and investor confidence in our economy, and we will continue this effort with our partners.”

The defendant was found guilty of testifying at the trial of his former boss, Reagor Dykes owner Bart Reagor, who was found guilty in October of making false statements to an FDIC-insured bank. At that trial, Mr Smith testified that Mr Reagor and his partner, Rick Dykes, took about $25 million out of the business for personal use, including about $3.3 million from a bank loan working capital for professional use.

Before testifying against his Mr. Reagor, Mr. Smith admitted in plea documents to defrauding the auto group’s main lender, Ford Motor Credit Company (FMCC), and covering up the fraud by depositing cross checks at several banks, a scheme known as the check -the kite.

In order to cover the ballooning expenses, Mr Smith admitted, he had Reagor Dykes’ accountants engage in a practice they dubbed ‘dummy flooring’.

Under his direction, the accounting staff searched through the records of vehicle identification numbers (VINs) of cars that Reagor Dykes had previously sold, then submitted new loan applications to FMCC using the old VINs – erroneously indicating that the company was looking for a loan in order to buy back the vehicle intended for resale. Instead of buying the car back, however, Reagor Dykes used the ensuing loan to cover other expenses.

“Either way, we have to work on everything we can even think of to cover the gains each day,” Mr. Smith wrote in an email cited in his factual resume.

To cover up the shortfall of the dummy floor system, Mr. Smith and his employees indulged in check-kits, artificially inflating the company’s bank account balances by depositing insufficient checks.

Vendor and payroll checks that should have been NSF were instead cleared during the banks’ float period, the period between depositing in the recipient’s account and deducting from the payer’s account.

“The deposits we make each make [sic] will most likely cover the checks we write to each other,” Smith wrote in an email.

Reagor Dykes also routinely breached a clause in their loan agreements that required them to repay FMCC within seven days of selling the vehicle for which the loan was made, Mr Smith admitted.

Rather than deal with the delay, accountants at Reagor Dykes created false papers, which they called “fake bullets”, in order to make it appear that the car had been sold more recently.

Mr. Smith is the fifteenth RDAG employee sentenced to more than 37 years combined in federal prison for the false floor and checkered kite system. Previously convicted Reagor Dykes employees include:

  • Diana Urias, office manager at Reagor Dykes used car mall in Levelland, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 2 years in federal prison and ordered to pay $19,335,901 $.10 in damages, jointly and severally.
  • RDAG Group Comptroller Sheila Miller pleaded guilty to conspiracy to commit bank fraud and was sentenced to 27 months in federal prison and ordered to pay $19,335,901.10 in restitution, jointly and severally.
  • Paige Johnston, office manager at the Reagor Dykes Chevrolet store in Floydada, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 27 months in federal prison and ordered to pay $40,254,297.72 in restitution , jointly and severally.
  • Lindsay Williams, and chief accounting officer of RDAG Group, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 27 months in federal prison and ordered to pay $19,335,901.10 in restitution, jointly and severally.
  • Sherri Wood, office manager at Ford’s Reagor Dykes store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 30 months in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and severally.
  • Pepper Rickman, an accounting controller at Toyota’s Reagor Dykes store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 4 years in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and jointly.
  • Brad Fansler, chief administrative officer of RDAG Group, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 42 months in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and severally.
  • Ashley Dunn, executive assistant to the CEO, pleaded guilty to conspiracy to commit bank fraud and was sentenced to 30 months in federal prison and ordered to pay $19,335,901.10 in restitution, jointly and severally.
  • Whitney Maldonado, office manager at Mitsubishi’s Reagor Dykes store in Lubbock, pleaded guilty to conspiracy to commit wire fraud was sentenced to 27 months in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and jointly.
  • Elaina Cabral, office manager at Toyota’s Reagor Dykes store in Plainview, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 27 months in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and severally.
  • Mistry Canady, an office manager at Ford’s Reagor Dykes store in Lamesa, pleaded guilty to conspiracy to commit wire fraud and was sentenced to 2 years in federal prison and ordered to pay $40,254,297.72 in restitution , jointly and severally.
  • RDAG director of security and compliance Wesley Neel pleaded guilty to conspiracy to commit wire fraud and was sentenced to 30 months in federal prison and ordered to pay $40,254,297.72 in restitution, jointly and jointly.
  • Andrea Kate Phillips, accounting associate and office manager at the Reagor Dykes Ford store in Plainview, pleaded guilty to felony jail error and was sentenced to four years probation and ordered to pay $40,254,297.72 in restitution, jointly and severally.
  • Steven Reinhart, Director of Legal Compliance for RDAG, pleaded guilty in February 2021 to an error in handling a felony and was sentenced to 6 months in federal prison and ordered to pay $40,254,297.72, jointly and jointly.

Bart Reagor, 55, is still awaiting sentencing.

The Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation Division conducted the investigation. Magistrate Judge Lee Ann Reno presided over the plea. Assistant U.S. Attorneys Joshua Frausto, Jeffrey Haag and Amy Burch are prosecuting the case.

Comments are closed.