5 April 2020

‘Vista Bank aided and abetted’ RDAG CFO’s fraudulence

Vista Bank CEO had luxury automobile ‘side deal’ with RDAG

LUBBOCK, Texas (KCBD) – documents filed Wednesday by the court appointed Special Counsel to Debtors describe a ‘side deal’ between RDAG CFO Shane Smith and Vista Bank CEO John Steinmetz that supplied Steinmetz with steeply reduced leases for luxury cars. Although this had been taking place, court papers state Vista Bank had been aware of RDAG check-kiting schemes.

“The two worked together, each profiting from the other’s misconduct, ” in line with the papers filed by Andrew Seger, the court appointed council that is special. “Vista Bank President, John D. Steinmetz, personally enriched himself through kick-backs (by means of approximately $150,000 in subsidized luxury vehicle leases for their individual usage, funded by Debtors), while on top of that he and Vista Bank at large benefited through the huge bank charges it gathered therefore my review here the prestige of experiencing a ‘top shelf’ customer while pursuing a strategy that is growth-at-any-cost. These advantageous assets to Vista Bank as well as its owners and executives proved consideration that is ample just allowing CFO Smith’s proceeded fraudulence.

“Vista knew the character in addition to degree of Shane’s schemes that are fraudulent. Not even close to stopping them, they took active measures to simply help Smith carry away their schemes, ” according into the papers.

Today the following are excerpts from the court documents released:

  • Dealerships deposited an astounding and amount that is inexplicable of into three Vista checking reports. In contrast with previous annual product sales, this quantity is around 5.8 times bigger than the 3 dealerships product sales for 2016 and 5.6 times larger than the product sales for 2017.
  • Vista Bank had advanced level understanding of whenever Ford engine Credit business audits had been planning to occur. In line with the disparity of reported sales and EFT that is actual to FMCC, Vista additionally more than likely knew that Smith had been regularly causing automobiles to be sold out of trust. Vista and Toby Cecil knowingly assisted Shane Smith together with monetary witchery by assisting him conjure the monies required to repay FMCC that the dealerships did have and through adept utilized of both the check clearing procedure therefore the evidently unlimited revolving personal credit line that Vista called a need deposit account.
  • Aggregate measurements of build up had been dramatically bigger than Vista Bank itself.
  • The accounts were habitually overdrawn despite the deposits.
  • The overdrafts were loans that are effectively short-term with intercompany transfers. Each day, Lmitsu, RDT and RDAC would make big intercompany deposits to try to cure these overdrafts to ensure an offered account would complete the time by having a balance that is positive.
  • . Smith commented to Cecil he had “lots of dishes rotating. ” Cecil reacted to Smith’s e-mail by noting: “I don’t discover how you retain them the plates all rotating: )” (Note: Toby Cecil may be the Vista Bank Lubbock marketplace President.
  • Vista Bank’s computer system told Vista exactly exactly just what Shane Smith had been doing.
  • Shane Smith told Vista Bank Officers exactly what he had been doing.
  • Cecil and Luman might have tellers waiting after hours for the dealership worker to reach with big intercompany checks become deposited. Cecil and Luman would instruct the tellers the way in which to put on the memo-posted credits and to which records. Towards the finish associated with the scheme here would multiple vast amounts deposited via belated cabinet memo post as well as on regular if you don’t basis that is daily.
  • . Account balances may actually other people as bigger than they really had been.
  • #Respectthehustle: Steinmetz Seeks Help of Investment Bankers To Aid Dealerships Plug The Hole. As ended up being their training, on or around May 7, 2018, Shane Smith delivered a quarterly company review when it comes to very first quarter of 2018 to any or all for the Debtor dealerships’ bankers including John Steinmetz and Toby Cecil. Nevertheless, and notwithstanding these apparent signs and symptoms of impending monetary doom, Steinmetz reacted to Smith’s upgrade via e-mail dated May 8, 2018 so when follows: “Incredible!! Congrats to your Greatest car Group on the planet. #respectthehustle” It goes without stating that Steinmetz ended up being definitely “respecting the hustle” as he received a number of luxury automobile leases which were greatly subsidized by Smith through direct money re payments through the dealerships.

The document defines exactly exactly how, “Steinmetz, for himself and their household, was able to lease the next vehicles just for 36 % associated with quantity he had been otherwise obligated to cover: (i) 2015 Cadillac Escalade; (ii) 2015 Chevrolet Tahoe LTZ; (iii) 2016 BMW 750i Xdrive; (iv) 2016 Infinity XQ80, and; (v) a 2016 Toyota Land Cruiser. The debtors made some $146,410.02 for the reason that respect, and from December 15, 2014, through the filing associated with bankruptcy petition in direct rent payments to a leasing business and also for the advantage of John Steinmetz and against an obligation of $228,150. ”

Over time, the automobiles increased in quality, the court papers state. “In the months which preceded the bankruptcy, Smith and Steinmetz had been in active conversations regarding acquiring an Aston Martin (of James Bond popularity) for Mr. Steinmetz’s utilize. The for this deal, but presumably it might have now been under comparable terms given that five other automobile leases. ”

The papers note a few circumstances by which brand brand brand new leases had been finalized at or about the exact same time that big unsecured records had been authorized because of the lender.

“In particular it ought to be noted that Steinmetz obtained extra leases over the summertime of 2017. The timing associated with the 2017 leases had been particularly suspect, because they took place close to enough time that Debtors Reagor Dykes Imports, L.P. (“Lmitsu”), Reagor Dykes Plainview, LP (“RDT”) and Reagor Dykes Auto business, LP (“RDAC”) received a $3 million buck loan that is unsecured Vista Bank and also at an occasion that its checking reports had been frequently overdrawn by thousands and thousands of bucks. Suffice it to express, the Leases for the 2016 BMW 750i Xdrive and 2016 Toyota Land Cruiser had been performed just one single month prior to the $3 million buck loan that is unsecured authorized. The Infinity QX80 had been leased by Steinmetz 30 days following the $3 million buck unsecured loan ended up being authorized. ”

One part of the documents filed today states, “The increase of Vista Bank President, John D. Steinmetz, from their days as being a banker that is junior Plains Capital Bank, to Lubbock County Republican Party seat, then as President of Vista Bank and ultimately to successive appointments as an associate associated with Board of Regents of this Texas Tech University System was well chronicled. For a guy forty-one years that is a significant application. Indeed it is very an application for some body of every age. All the trappings of an American success story– right down to the shiny luxury car as was the case with Shane Smith, on the surface, Steinmetz bares. But like Shane Smith, all had not been since it seemed to be. ”

Court papers also describe several years of e-mails between RDAG CFO Shane Smith and bank officers regarding overdrafts and unconventional hours kept to ensure after-hours bank deposits could possibly be created by RDAG suggesting a relationship that is causal the favors done for Steinmetz plus the bank’s habitual tolerance of RDAG overdrafts.

“And this will be the reason the deals between Smith and Steinmetz are incredibly important- they offer a lens by which view Vista’s subsequent conduct. And Vista’s conduct, when viewed from a perspective that is objective just cannot be explained except by the summary that it was a participant in Smith’s schemes.

The plaintiffs and cross claimants look for to disallow the entirety of Vista Bank’s liens, claims and results in of action when you look at the bankruptcy situation.

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5 April 2020