Dive Brief:
- Shane Smith, former CFO of Lubbock, Texas-based Reagor-Dykes Auto Group, pleaded guilty to wire fraud this summer and will be sentenced in January, KCBD Amarillo, Texas, reported on Tuesday. The auto group was one of the largest dealerships in West Texas before its 2018 bankruptcy.
- Smith faces up to 20 years in prison, probation and restitution of more than $50 million for giving fraudulent information to Ford Motor Credit through a check-kiting scheme in 2018.
- Smith pleaded guilty to providing false information that helped Reagor-Dykes obtain additional financing from Ford. He also delayed other payments to the company, according to the report. The case was heard in the U.S. District Court for the Northern District of Texas.
Dive Insight:
Under a fake floor-planning scheme Smith designed, KCBD said, staff from the auto group submitted vehicle identification numbers from old sales to give the appearance the vehicles were being bought again.
The fraud cost Ford Motor Credit $27 million and the check kiting caused an estimated $23 million in bank losses, the report said.
Smith pleaded guilty to conspiracy to commit wire fraud in mid-June. Reagor-Dykes filed for bankruptcy in August 2018.
Above-market compensation and high overhead, among other things, caused Reagor-Dykes' financial struggles, the report said.
