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

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

LUBBOCK, Texas (KCBD) – court papers 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 occurring, court papers say Vista Bank ended up being alert to 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 unique council. “Vista Bank President, John D. Steinmetz, personally enriched himself through kick-backs (in the shape of approximately $150,000 in subsidized luxury vehicle leases for their individual usage, funded by Debtors), while in addition he and Vista Bank at large benefited through the huge bank costs it accumulated additionally the prestige of experiencing a ‘top shelf’ consumer while pursuing a strategy that is growth-at-any-cost. These advantageous assets to Vista Bank as well as its owners and executives proved sufficient consideration for just allowing CFO Smith’s continued fraudulence. ”

“Vista knew the type therefore the level of Shane’s schemes that are fraudulent. Definately not stopping them, they took active measures to assist Smith carry his schemes out, ” 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 records. This amount is approximately 5.8 times larger than the three dealerships gross sales for 2016 and 5.6 times larger than the gross sales for 2017 by comparison with past annual gross sales.
  • Vista Bank had advanced level understanding of whenever Ford engine Credit business audits were likely to happen. In line with the disparity of reported sales and actual EFT Payments to FMCC, Vista additionally very possible knew that Smith had been regularly causing cars become sold out of trust. Vista and Toby Cecil knowingly assisted Shane Smith along with his witchery that is financial by him conjure the monies essential to repay FMCC that the dealerships did have and through adept utilized of both the check clearing process together with evidently limitless revolving credit line that Vista called a need deposit account.
  • Aggregate size of build up had been dramatically larger than Vista Bank it self.
  • Regardless of the build up the reports had been habitually overdrawn.
  • The overdrafts had been efficiently short-term loans paid back with intercompany transfers. Each and every day, Lmitsu, RDT and RDAC would make big intercompany deposits to try to cure these overdrafts to make certain that a offered account would complete the time having a good balance.
  • . Smith commented to Cecil which 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 exactly what Shane Smith ended up being doing.
  • Shane Smith told Vista Bank Officers exactly what he had been doing.
  • Cecil and Luman could have tellers waiting after hours for a dealership worker to reach with big intercompany checks become deposited. Cecil and Luman would instruct the tellers exactly how to utilize the memo-posted credits and to which accounts. Towards the finish associated with scheme here would multiple huge amount of money deposited via late 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 had been their training, on or around might 7, 2018, Shane Smith sent a business that is quarterly when it comes to very first quarter of 2018 to any or all regarding the Debtor dealerships’ bankers including John Steinmetz and Toby Cecil. Nonetheless, and notwithstanding these apparent signs of impending monetary doom, Steinmetz reacted to Smith’s upgrade via e-mail dated might 8, 2018 so that as follows: “Incredible!! Congrats towards the Greatest Auto Group on earth. #respectthehustle” It goes without stating that Steinmetz ended up being undoubtedly “respecting the hustle” as he received a number of luxury automobile leases which were heavily subsidized by Smith through direct money re re payments through the dealerships.

The document defines exactly exactly how, “Steinmetz, for himself along with his family, surely could rent the next cars for only 36 per cent of this 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. For the reason that regard, and from December 15, 2014, through the filing associated with the bankruptcy petition, the Debtors made some $146,410.02 in direct rent re re payments to a renting business and also for the advantageous asset of John Steinmetz and against an obligation of $228,150. ”

The vehicles increased in quality, the court documents state over the years. “In the months which preceded the bankruptcy, Smith and Steinmetz had been in active talks regarding obtaining an Aston Martin (of James Bond popularity) for Mr. Steinmetz’s utilize. The with this deal, but presumably it might have already been under comparable terms while the five other automobile leases. ”

The papers note several circumstances by which brand brand new leases had been finalized at or just around the exact same time that big unsecured records had been authorized because of the bank.

“In particular it ought to be noted that Steinmetz obtained extra leases over summer time of 2017. The timing of this 2017 leases had been especially suspect, because they took place in close proximity 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 unsecured loan from Vista Bank and also at an occasion that its checking accounts had been regularly 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 executed only one thirty days prior to the $3 million buck unsecured loan had been authorized. The Infinity QX80 had been leased by Steinmetz a month following the $3 million buck unsecured loan had been authorized. ”

One part of the papers filed today states, “The increase of Vista Bank President, John D. Steinmetz, from their times as being a junior banker with Plains Capital Bank, to Lubbock County Republican Party seat, then as President of Vista Bank and ultimately to successive appointments as a part regarding the Board of Regents of this Texas Tech University System happens to be well chronicled. For a guy forty-one years this is certainly quite a resume phone number for paydayloanhere.com. Indeed it is fairly an application for somebody 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 because it appeared to be. ”

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

“And this can be the key reason why the deals between Smith and Steinmetz are incredibly important- they give you a lens by which view Vista’s conduct that is subsequent. And Vista’s conduct, whenever seen from a goal perspective, just cannot be explained except because of the summary 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 instance.

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