Dykes: Former Reagor-Dykes CFO admits he provided false info to

Dykes: Former Reagor-Dykes CFO admits he provided false info to Ford Credit

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Shane Smith, photo from Reagor Dykes website Shane Smith, photo from Reagor Dykes website
LUBBOCK, Texas -

In his response to Ford Motor Credit's law suit, Reagor-Dykes co-owner Rick Dykes accused the company's former chief financial officer of providing false information to FMC.

As reported earlier, Ford Credit commended Reagor-Dykes following its June audit. New details in this filing show the Auto Group's short-term indebtedness to Ford Credit was about $25 million as of the June audit. But, according to this filing, Ford Credit notified former R-D chief financial officer Shane Smith of irregularities it found in numbers supplied to Ford Credit. Dykes states neither he nor co-owner Bart Reagor were made aware of Ford Credit's impending July 26 on-site review; they were both out of town. According to Dykes' response, it was on that day Smith contacted Reagor and Dykes. They returned to Lubbock the next two days. 

Ford Credit sued several Reagor-Dykes companies as well as co-owners Dykes and Reagor July 31, claiming $116 million owed with $41 million due now. The next day many, but not all, Reagor-Dykes companies filed for chapter 11 protection. Reagor and Dykes individually did not, though recent filings show both the co-owners and other R-D companies that did not file for chapter 11 may soon do so. 

Dykes' response filed Thursday identifies Smith as chief financial officer of Reagor-Dykes Auto Group for the past 11 years. It states Reagor is CEO; Dykes had no day-to-day management position with the Auto Group. The response states Reagor and Dykes "relied on and trusted Mr. Smith to manage all material financial transactions of Reagor-Dykes Auto Group".

This filing states before working for Reagor-Dykes, Smith was an employee of Ford Credit. And, it claims since working for Reagor-Dykes, Smith maintained a "close professional and personal relationship with Gary Byrd, Jr., the Dallas Regional Manager of Ford Credit and the person primarily responsible for overseeing Ford Credit's financing of the Reagor-Dykes Auto Group. Mr. Byrd knew that Mr. Smith was responsible for managing the financial transactions between Reagor-Dykes Auto Group and Ford Credit and for reporting Reagor-Dykes Auto Group’s financial information to Ford Credit."

According to this new filing, while Reagor-Dykes companies were filing for bankruptcy protection Aug. 1, Smith "admitted that he had provided false financial information regarding the Reagor-Dykes dealerships to Ford Credit and Messrs. Dykes and Reagor. Upon learning of Mr. Smith’s disclosure, Reagor-Dykes Auto Group terminated Mr. Smith’s employment and referred Mr. Smith’s disclosure to the local United States Attorney’s office, which has commenced an investigation." 

There is no record of any criminal charges filed against Smith. 

This response to the suit states because of everything ongoing through bankruptcy court, there has not been adequate time for attorneys to determine questions regarding Ford Credit's suit. This includes, according to Dykes' response, "particularly the nature of Mr. Byrd’s relationship with Mr. Smith and Mr. Byrd’s knowledge and actions during the period in which Mr. Smith was providing false financial information to Ford Credit and Messrs. Dykes and Reagor."

Dykes states almost overnight, Ford Credit's lawsuit has bankrupted six dealerships, led to the loss of hundreds of jobs and the destruction of substantial wealth. 

Senior U.S. District Judge Sam Cummings granted an extension for parties to respond to Ford Motor Credit's suit. That deadline is Friday. 

Dykes asks for a jury trial.

Read the full response below:

TUES: Reagor-Dykes Auto Group requests court to allow sale of company
SEPT. 4: Reagor-Dykes Auto Group establishes process to resolve customer problems
AUG. 31: International Bank of Commerce asks for court to allow it to foreclose on Reagor-Dykes dealerships
AUG. 31: More Reagor-Dykes companies, co-owners may soon file for chapter 11
AUG. 30: Court extends Reagor-Dykes employment of CRO; officer discusses potential dealership buyers
AUG. 29 : International Bank of Commerce asks for loan payment in Reagor-Dykes case
AUG. 29: Ford Credit objects to Reagor-Dykes earlier legal team
AUG. 27: Vista Bank doubles relief request in new federal suit against FirstCapital Bank
AUG. 25: Reagor-Dykes chief restructuring officer hires new legal team
AUG. 25: GM proceeding with termination of Reagor-Dykes Floydada
AUG. 23: Landlords demand rent for Reagor-Dykes dealerships in Lubbock, Plainview
AUG. 20: Ford Credit moves ahead with suit against Reagor, Dykes, some R-D companies
AUG. 18: Reagor-Dykes bankruptcy case: Read court order following Aug. 16 hearing
AUG. 17: Auto dealer claims Reagor-Dykes owes $513,000, vehicles may be in consumers' possession
AUG. 16: Vista Bank sues FirstCapital for $6 million, claims Dykes helped perpetrate check kiting scheme
AUG. 16: Bankruptcy court allows Reagor-Dykes continued use of cash collateral, hiring of CRO
AUG. 15: Reagor-Dykes Auto Group issues written apology
AUG. 14: Loss of Reagor-Dykes Chevrolet in Floydada a potential financial pitfall for city
AUG. 14: Vehicle auction company claims Reagor-Dykes owes it $687,000
AUG. 14: Ford Credit claims Reagor-Dykes is not following court orders; court grants extension to file docs
AUG. 13: U.S. Trustee opposes Reagor-Dykes request to hire chief restructuring officer
AUG. 10: Ford Credit: Reagor-Dykes fraud may be among largest of its type in U.S. history; GM files to terminate Floydada dealership
AUG. 9: Reagor-Dykes questions former CFO’s actions; Contractor claims $700,000 due now
AUG. 7: Former Reagor-Dykes employees claim they were not paid
AUG. 6: Customers concerned over Reagor-Dykes 'unwinding' process
AUG. 6: Ford suit against Reagor-Dykes on hold while bankruptcy case proceeds
AUG. 3: Judge approves Reagor-Dykes employee pay
AUG. 2: Mayor: Downtown Lubbock growth to remain strong regardless of Reagor-Dykes future
INITIAL STORY: Ford Motor Credit sues Reagor-Dykes; R-D files for chapter 11 bankruptcy

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