Friday, June 10 2022

AMARILLO, Texas (KAMR / KCIT) – After a jury convicted Reagor-Dykes Auto Group co-founder Bart Reagor for making false statements to a bank, as well as finding him not guilty on two counts of bank fraud during a trial, Reagor’s defense team responded. In recent days, the defense has filed a motion for Reagor to be acquitted of the charge or for Reagor to receive a new trial.

According to previous reports from MyHighPlains.com, Reagor’s week-long trial consisted of jury members hearing numerous witnesses, including former Reagor-Dykes Auto Group CEO Shane Smith as well as former director Steven Reinhart of the automotive group’s legal compliance. Smith and Reinhart are scheduled to appear in court on December 21 for their sentencing hearings after pleading guilty to their respective charges in connection with the auto group’s fraud scheme.

After hearing the presented case, the jury deliberated for about a day and a half, resulting in several notes to District Judge Matthew J. Kacsmaryk, the federal judge overseeing Reagor’s trial, stating that the jury was deadlocked. After Kacsmaryk invoked a modified Allen charge, the jury returned the verdict on the afternoon of October 15.

According to court documents, defense officials pointed out that “the evidence presented at (the) trial was insufficient to support Mr Reagor’s conviction,” referring specifically to the unclear definition of “working capital” given by prosecution throughout the trial. .

During the trial, prosecution lawyers laid out their case, saying Reagor had a “secret” plan to take $ 1,766,277.77 on a $ 10 million capital loan from the International Bank of Commerce. (IBC) and use it for personal use after officials told the bank it was only to be used for growing the automotive group. The prosecution referred to an email describing the plan to Smith and co-founder Rick Dykes, who also took a distribution, describing the plan for using the funds in this manner.

In the acquittal motion, Reagor’s defense said “no government witness could agree on a definition of ‘working capital’ based on the language of the loan agreement” between the auto group and IBC .

In the motion, the defense referred to a number of government witnesses, including Steve Dawson, a chartered accountant and certified fraud examiner, who said “working capital” is not defined in the loan agreement.

The defense also referred to the testimony of IBC President and CEO William Schonacher, who testified that the definition of “working capital” under generally accepted accounting principles (GAAP) is “the differential between current assets and current liabilities. The defense asserts in its petition that the definition of GAAP “does not prohibit the use of working capital to make distributions.”

Across the body of defense witnesses during the trial, officials state in the motion that they testified that homeowners’ distributions are common uses of working capital under the wording of the loan agreement, as well. as the term “accepted industry standards”.

During his testimony, Franklin Snyder, professor of law at Texas A&M University School of Law, said that the working capital can be used for any business purpose of the company.

“And when I say ‘business purpose,’ paying the owners of the business for their investment is one of the recognized legitimate business objectives for using working capital,” Snyder said in his testimony, which was printed in the motion. “All distributions, distributions like all other payments come from working capital.”

In its motion for acquittal, the defense also refers to a conversation Schonacher had with Reagor about the loan, claiming that the definition of “working capital” was not defined at that meeting, giving the automotive group the ability to distribute distributions to both Reagor and Dykes. .

The defense pointed out that the term “working capital” is ambiguous and that an individual’s understanding of the term “could easily have included the use of the money for distributions to owners”. Defense claims prosecution should have proved that Reagor knew the plan was outside the scope of the definition of ‘working capital’, but defense says no evidence of this evidence was provided. .

“One thing has been proven beyond a doubt in this trial, namely that knowledgeable people do not agree on the definition of working capital – so much so that one expert commented that the only way to clarifying what the term means in a particular transaction is to define the term of the contract or loan agreement in question. It was not done here, ”the documents say. “The government has presented no evidence that Reagor knowingly misled the bank when he told them he planned to use the loan proceeds as working capital. In light of the different definitions of the term, this proof is crucial. Without it, there was not enough evidence on the critical element of the offense that Mr. Reagor knowingly made a false statement in seeking a working capital loan from IBC.

On Tuesday, there was no response to the defense request for acquittal for a new trial.

Reagor confiscation update

According to court documents filed earlier this month regarding the prosecution’s motion for confiscation, Kacsmaryk issued an order establishing that there will be a preliminary forfeiture hearing for the prosecution and defense on February 9, 2022 in 10 hours.

According to previous reports, the prosecution initially filed a forfeiture petition on November 2, asking Reagor to confiscate $ 1,760,000 obtained as a result of the false statement to a bank that led to his guilty verdict.

After the prosecution’s motion, Reagor’s defense team urged the court in its response to dismiss the motion and hold its own forfeiture hearing after the prosecution and defense had access to the trial transcript. “With sufficient time to examine it”.

Amarillo Federal Court officials have previously said Reagor is expected to be sentenced at 1:30 p.m. on February 24, 2022 and faces up to 30 years in federal prison, according to the United States Department of Justice.

This story is developing. Check with MyHighPlains.com for updates

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