August 3, 2020, Northern District of Texas – Dennis Faulkner, the trustee of the Reagor Dykes Auto Group Creditors Liquidating Trust for the Debtors Reagor Dykes Motors, LP, et al recently initiated a lawsuit against Defendant AimBank in the U.S. Bankruptcy Court for the District of Northern Texas. The Trustee seeks to recover more than $9.3 million from the depository banking and lending institution. Specifically, the Trustee intends to recoup certain certificates of deposits previously offset by AimBank and belonging to the Debtors. The Trustee also seeks to set aside and recover certain payments made to the bank in furtherance of the Debtors’ former CFO Shane Smith’s fraudulent sight-draft scheme.
According to the trustee’s complaint, AimBank allegedly assisted Smith to carry out fraud. By way of background, the banking and lending relationship between various Debtor entities and AimBank initiated way before 2014. The particular importance to this case is AimBank’s banking relationship with two Debtor entities – Debtors Reagor Dykes Snyder LP and Reagor Dykes Motors, LP d/b/a Spike Dykes Ford, who operated car dealerships in the cities of Snyder and Lamesa in Texas. These two entities maintained two business checking accounts with AimBank.
As alleged in the complaint, during the year preceding the bankruptcy, the staggering sum of $449,069,845.15 passed through the two AimBank business checking accounts. The vast majority of these funds represented deposits and outgoing checks to and from other Reagor Dykes entities. These deposits and withdrawals were grossly outsized concerning the size of AimBank. The Trustee alleges that AimBank did business with Shane Smith despite the red flags that its computer system waved on daily basis. The Trustee reasoned that the transactions were of such magnitude that they simply couldn’t have gone unnoticed at the very highest levels of the bank or by Scott Wade himself.
According to the trustee, AimBank knew of Smith’s check-kiting scheme for quite a long time and allowed him to use its facilities for that purpose. The complaint further states that AimBank’s knowing participation in Smith’s check-kiting scheme was not the only part of Smith’s fraudulent scheme in which AimBank knowingly participated. AimBank also let Smith create and control millions of dollars of “float” to fuel his financial schemes by creating “sales” of vehicles between the various Reagor Dykes dealerships and using an antiquated form of payment to support the transaction—the sight draft.
The Trustee has requested relief in this adversary proceeding according to §§ 105, 363, 502, 541, 544, 547, 548, 549, 550, and 551 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”); Rules 3007, 7001(1), and 7003 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”); and the Local Bankruptcy Rules for the United States Bankruptcy Court for the Northern District of Texas (the “Local Rules”). Honorable Judge Robert L. Jones is presiding over this adversary proceeding. The case number is 18-50214 in the United States Bankruptcy Court for the Northern District of Texas. Liggett Law Group, P.C. is representing AimBank. AimBank has not yet filed a legal response to the trustee’s claims.