Vista Bank submits new statement from Rick Dykes, new allegations against FirstCapital

On Thursday, Vista Bank filed updated documents against FirstCapital in federal court. Vista sued FirstCapital last year – not long after the Reagor Dykes Auto Group filed for bankruptcy. Among other things, Vista claimed that FirstCapital inappropriately shifted more than $6 million of loss onto Vista by manipulating the federal check clearing system.

SPECIAL NOTE: FirstCapital issued a statement in resospone to the newest documents from Vista. Scroll down to see it.

The new court records included a statement from Rick Dykes who is 50 percent owner of Reagor Dykes.

Dykes’ statement said he used to be director on the board of FirstCapital, but he then switched over to become an advisory director. The timing was not listed, but the way his statement reads, this switch was well before Reagor Dykes filed for bankruptcy on August 1, 2018.

At the time of the bankruptcy, Ford accused Reagor Dykes of fraud and default.

Dykes admits that he spoke to FirstCapital prior to any public knowledge of the bankruptcy. But Dykes’ statement under oath said it was not for the purpose of helping FirstCapital. His plan on July 31 was to look for a new source of financing for Reagor Dykes.

The statement said in part:

“We disclosed that several of the RDAG [Reagor Dykes Auto Group] dealerships were probably going to have to file bankruptcy in the next day or two because of Ford Credit’s termination of their floorplan financing. We emphasized that continuation of FirstCapital’s floor-plan financing to RAM [Reagor Auto Mall] was key to RDAG, because RAM’s continued operations would allow RDAG to retain key personnel and generate profits that could be used in the bankruptcy cases of RDAG’s Ford Stores. The FirstCapital representatives advised us that they would review the situation, discuss it internally, and would provide an answer to us at a meeting the next morning.”

Dykes said he met with FirstCapital representatives the next day, which was August 1.

“When I arrived, I learned that FirstCapital had frozen all of my personal bank accounts and some FirstCapital stock that I owned. I immediately hand-wrote and turned in my letter of resignation as an advisory board member of FirstCapital. On that day, FCB would not let me cash a check from an insurance company for a hail claim. The FirstCapital representatives advised me and the others that the bank had not yet decided whether it would provide floor-plan financing to RAM going forward.”

In the original version of the lawsuit, Vista accused Dykes of participating in a form of bank fraud called check kiting. However, in his statement, Dykes said check kiting was a concept he never heard of before.

Dykes believed that Reagor Dykes CFO Shane Smith was the person manipulating bank accounts. While other employees suspected a problem long before August 1, Dykes said Smith was able to “explain everything away.”

One of the representatives of FirstCapital in 2017 told Dykes that sometimes Reagor Dykes’ bank accounts had negative balances. Smith was asked about it. After that conversation, FirstCapital said “Shane was doing much better…” Dykes believed this was the end of the problem.

But once Ford confronted Dykes and Bart Reagor, they in turn confronted Smith.

Concerning a conversation on July 29, Dykes wrote, “Shane Smith was initially reluctant to admit that the amount of the default was as large as Ford Credit was alleging. But as the day wore on, Shane began to admit that there may be a bigger problem than he originally thought. But he was still not admitting that he had intentionally caused the default.”

Concerning another conversation on July 30, Dykes wrote:

“Mr. Smith emotionally admitted to the group that he was responsible for the problems that Ford Credit had uncovered in the audit of the RDAG Ford Stores and that neither Mr. Reagor nor I knew anything about the nature of the problems. Mr. Smith later signed and delivered an affidavit to one of RDAG’s lawyers, Dan Hurley, that stated the same thing that he disclosed during the meeting. I do not have a copy of the Mr. Smith’s affidavit, but I have read it at Mr. Hurley’s office.”

“At this point, I have no evidence of embezzlement by Shane Smith from Reagor-Dykes…,” Dykes also wrote. “I do not suspect that Reagor-Dykes employees working with Shane Smith assisted with his fraud, based upon his confession and the information I have at this time.”

Dykes also wrote: “Shane Smith admitted that the problems extended to other lenders of Reagor-Dykes and was not limited to the default with Ford Credit. I was stunned at the extent of the problems that Shane had created and covered up.”

Smith was fired on August 1 according to Dykes. Vista’s lawsuit against FirstCapital remains ongoing, and the Reagor Dykes bankruptcy is also still pending.

CLICK HERE to read Dykes full statement under oath.

Vista Bank provided the following news release shortly after the new court documents were filed:

New Rick Dykes Witness Statement Causes Vista Bank to File Fraudulent Transfer Claim Against FirstCapital Bank

Based on newly discovered evidence, Vista Bank filed a motion to amend its complaint to add factual allegations and a claim for fraudulent transfer against FirstCapital Bank. Vista Bank originally sued FirstCapital Bank and its CEO and Chairman of the Board of Directors for illegally using inside information from its Advisory Director, Rick Dykes, to wrongfully return millions of dollars in hot checks to other banks. A recently obtained sworn witness statement from Rick Dykes establishes that right after Mr. Dykes informed FirstCapital Bank about the impending Reagor-Dykes Auto Group bankruptcies last July, FirstCapital also demanded over $7 million dollars in extra collateral from Mr. Reagor and Mr. Dykes in exchange for a promise to provide $2.1 million in additional floor-plan financing. According to Mr. Dykes, securing the additional financing was an attempt to save Reagor-Dykes Auto Group from financial ruin and preserve the jobs of hundreds of employees.

Both Mr. Reagor and Mr. Dykes, along with their wives, signed the pledge agreements to provide FirstCapital with the additional collateral, but FirstCapital Bank never provided the promised additional financing. Instead, FirstCapital put the pending acquisition of Fidelity Bank and its own profitability first by fraudulently taking the additional collateral in exchange for a false promise to provide additional help to Reagor-Dykes. By doing so, FirstCapital sealed the demise of the Reagor-Dykes Auto Group and ensured that hundreds of West Texans would lose their jobs, and other creditors, like Vista Bank, would be deprived of recovering damages.

Recent documents also reveal that within days of Reagor-Dykes filing for bankruptcy, FirstCapital gave Bart Reagor and Shane Smith, the former Reagor-Dykes Auto Group CFO, millions of dollars in home equity financing, despite the fact that the ReagorDykes empire had just imploded – leaving bystanders to question the motive for the financing, given no foreseeable path to recoup either loan and the potential equal housing lending violations if others would not have been afforded the same opportunity.

The complaint also alleges that prior to the bankruptcy of Reagor-Dykes, Mr. Dykes, who was a board member of FirstCapital, was asked to step down from his post to take an advisory board member position. This action was done to avoid borrowing limits on directors posed under Regulation O, a federal banking regulation that limits directors’ financial transactions. According to Mr. Dykes’ sworn statement, despite his removal from the board, his role and participation in the business of the board of FirstCapital, continued unchanged. Finally, the complaint temporarily dismisses FirstCapital’s codefendant, First Bancshares of Texas, Inc., the holding company of Defendant FirstCapital and Ken Burgess, in exchange for its agreement to respond to discovery. Discovery is in its infancy, and Vista Bank reserves the right to join Defendant First Bancshares of Texas, Inc. back into the lawsuit if facts prove liability.

Vista Bank is confident that the federal judge and jury will do justice, holding FirstCapital and two of its officers and primary architects accountable for violating federal and state law. Attached is a copy of the Motion for Leave to File Amended Complaint and the Appendix in Support, containing Rick Dykes’ witness statement and evidence of the home equity loans FirstCapital extended to Bart Reagor and Shane Smith.

FirstCapital filed the following statment shortly after Vista filed new court records:

STATEMENT FROM FIRSTCAPITAL BANK OF TEXAS REGARDING VISTA BANK’S AMENDED FILING

It is easy to make allegations; it is hard to prove them. Vista Bank is finding that out.

Vista Bank filed suit in August alleging that FirstCapital had an advantage on Vista Bank in returning bad Reagor-Dykes checks. The evidence reveals that Vista Bank and FirstCapital returned checks on the same day. Thus, neither bank had an advantage over the other.

Vista Bank, through its recently-filed motion is backtracking on many allegations it made when suit was filed in August.

Vista Bank originally insisted that FirstCapital was in a meeting with Rick Dykes on July 30th, presumably giving FirstCapital an additional 24-hours head start. Vista Bank now seeks to drop that allegation because the evidence proves there was no such meeting.
Vista Bank originally brought fraud claims against FirstCapital. It now seeks to drop those.
Vista Bank originally sued Kenneth Burgess, FirstCapital’s board chairman, and it now seeks to drop him from the suit.
Vista Bank originally sued FirstCapital’s parent company. It now seeks to drop the parent company.

Contrary to Vista Bank’s most recent allegations, in the weeks following the Reagor-Dykes bankruptcy filings, Rick Dykes agreed to pledge additional collateral to FirstCapital because of uncertainties regarding the various Reagor-Dykes debts owed to FirstCapital that he guarantied and in consideration for the release of millions of dollars of cash to Rick Dykes out of his account at FirstCapital in which the bank had a lien. In addition, FirstCapital agreed to loan Reagor Auto Mall $2.1 million dollars as a part of the existing floorplan line of credit to help fund the operations of Reagor Auto Mall, but FirstCapital was instructed by counsel for Reagor Auto Mall to not fund the additional money. FirstCapital honored Reagor Auto Mall’s request. None of this is new information to Vista Bank and Vista Bank has known the details of all of this since early August from the depositions taken early in the bankruptcy proceeding. Notwithstanding this knowledge, Vista Bank distorts the facts in a desperate attempt to keep alive a failing lawsuit against FirstCapital.

In regard to the home equity financing, in one instance FirstCapital advanced additional funds to complete construction of a house in order to protect FirstCapital’s collateral position. In another instance, it combined two existing loans into one and did not advance additional funds.

Instead of relying on the court of law to decide the facts, Vista Bank wishes to try this case in the court of public opinion.