Bart Reagor and Rick Dykes filed court records on Friday laying out the case as to why Ford Motor Credit Company should not automatically collect $100 million or more from them.
Ford sued Reagor Dykes along with Mr. Reagor and Mr. Dykes on July 31. Ford accuses Reagor Dykes of fraud and roughly $40 million of default. Ford also claimed that Bart Reagor and Rick Dykes personally guaranteed the company debt to Ford – which totals than $100 million.
Trying to Avoid Summary Judgment
Since Reagor Dykes filed for bankruptcy, Ford’s argument is that Reagor and Dykes automatically owe the money. Ford argues that Reagor and Dykes do not even have the right to go to trial. They just owe the money and that is that.
The legal maneuver for collecting the money without even going to trial is called “summary judgment.”
But the document filed on Friday claims Ford employees either knew or should have known something was wrong long before July 31. Reagor and Dykes said Friday in court records that if Ford participated in fraud then the personal guaranty is lost.
A judge has not yet ruled, and even if the judge agrees with Reagor and Dykes, it does not mean the two men are off the hook. It only means they avoid “summary judgment.”
Y’all Have Some Big Problems
As part of newest court documents, Rick Dykes told his story in writing. He described the moment he first heard from Ford that, “Y’all have some big problems.”
If Reagor Dykes really did default on $40 million, how did the problem get so big? Ford claims the Lubbock-based dealerships falsified sales records to make it look like vehicles had not sold and therefore money was not yet owed to Ford.
But Dykes had another explanation.
Dykes said “[The] Reagor-Dykes Auto Group was ‘loading’ (i.e., reporting) a disproportionately large number of inventory sales in the week immediately preceding each Ford Credit quarterly audit.”
Dykes said CFO Shane Smith would have known. Smith was fired shortly after Ford sued Reagor Dykes. Dykes also revealed Smith “invoked his Fifth Amendment privilege against self-incrimination.”
But Dykes went one step further. He claimed Smith’s friend and employee of Ford, Gary Byrd, also knew or should have known.
Dykes was out of town in late July. He came back to Lubbock when he heard Ford was doing an emergency audit. He talked with Byrd inside the downtown location of Reagor Dykes on the morning of Saturday, July 28.
That’s when Byrd told him, “Y’all have some big problems.”
How Long Has This Been Going On?
Dykes had a question about the strange sales records.
“… This was the first time that I had ever heard of such a practice, I was surprised and asked Mr. Byrd: ‘How long has this … been going on?’”
“‘For quite awhile,’ replied Mr. Byrd. ‘Why weren’t Bart and I notified about this?’ I asked.”
Dykes went on to write, “Mr. Byrd looked at me with a blank expression on his face and did not immediately respond to my question. After a pause, Mr. Byrd replied: ‘Well, I did tell Shane.’”
To read Dykes’ version of the story, Ford knew good-and-well there was a problem. But instead of providing information to the owners in order to get the problem stopped, Ford provided information to the guy who was creating the problem. At least, that’s how Dykes tells the story.
CLICK HERE to read the full affidavit.
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