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

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

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

LUBBOCK, Texas (KCBD) – court papers filed Wednesday because of 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, documents say Vista Bank had been 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 (by means of approximately $150,000 in subsidized luxury vehicle leases for their individual usage, funded by Debtors), while as well he and Vista Bank at large benefited through the huge bank costs it built-up and also the prestige of experiencing a ‘top shelf’ consumer while pursuing a growth-at-any-cost strategy. These advantageous assets to Vista Bank and its particular owners and executives proved consideration that is ample just enabling CFO Smith’s proceeded fraudulence. ”

“Vista knew the character and also the level of Shane’s schemes that are fraudulent. Definately not stopping them, they took active measures to greatly help Smith carry his schemes out, ” according to your 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. 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 had been planning to take place. In line with the disparity of reported sales and EFT that is actual to FMCC, Vista additionally very possible knew that Smith ended up being regularly causing automobiles become sold out of trust. Vista and Toby Cecil knowingly assisted Shane Smith together with his financial witchery by helping him conjure the monies essential to repay FMCC that the dealerships did have and through adept utilized of both the check clearing procedure while the evidently limitless revolving personal credit line that Vista called a need deposit account.
  • Aggregate measurements of build up had been somewhat bigger than Vista Bank it self.
  • The accounts were habitually overdrawn despite the deposits.
  • The overdrafts had been loans that are effectively short-term with intercompany transfers. Each and every day, Lmitsu, RDT and RDAC will make large intercompany deposits to endeavor to cure these overdrafts in order that a provided account would complete the time having a good stability.
  • . Smith commented to Cecil which he had “lots of dishes spinning. ” 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 what Shane Smith ended up being doing.
  • Shane Smith told Vista Bank Officers just just what he had been doing.
  • Cecil and Luman will have tellers waiting after hours for a dealership worker to reach with large intercompany checks become deposited. Cecil and Luman would instruct the tellers exactly how to utilize the memo-posted credits and to which reports. Towards the conclusion of the scheme here would multiple vast amounts deposited via belated cabinet memo post as well as on regular if you don’t daily foundation.
  • . Account balances may actually other people as bigger than they actually had been.
  • #Respectthehustle: Steinmetz Seeks Help of Investment Bankers To Greatly Help Dealerships Plug The Opening. As had been his practice, on or around May 7, 2018, Shane Smith sent a business that is quarterly for the very very first quarter of 2018 to any or all for the Debtor dealerships’ bankers including John Steinmetz and Toby Cecil. Nonetheless, and notwithstanding these apparent signs of impending doom that is financial Steinmetz responded to Smith’s upgrade via e-mail dated might 8, 2018 so that as follows: “Incredible!! Congrats towards the Greatest car Group on the planet. #respectthehustle” It goes without stating that Steinmetz ended up being definitely “respecting the hustle” as he received a few luxury vehicle leases that have been greatly subsidized by Smith through direct money re re payments from the dealerships.

The document defines just exactly just how, “Steinmetz, for himself and their family members, surely could rent listed here cars for only 36 % of this quantity he had been otherwise obligated to pay: (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 the bankruptcy petition in direct rent re payments up to a leasing business and also for the advantageous asset of John Steinmetz and against an obligation of $228,150. ”

Through the years, the cars increased in quality, the court papers state. “In the months which preceded the bankruptcy, Smith and Steinmetz had been in active conversations regarding getting an Aston Martin (of James Bond popularity) for Mr. Steinmetz’s utilize. The for this deal, but presumably it could have already been under similar terms while the five other automobile leases. ”

The papers note a few circumstances by which brand brand brand new leases had been finalized at or just around the time that is same large unsecured notes had been approved because of the financial institution.

“In particular it must be noted that Steinmetz obtained additional leases over summer time of 2017. The timing of this 2017 leases had been particularly suspect, while they happened close to the full 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 a period that its checking records were frequently overdrawn by thousands and thousands of dollars. Suffice it to express, the Leases when it comes to 2016 BMW 750i Xdrive and 2016 Toyota Land Cruiser had been performed only one thirty days prior to the $3 million dollar loan that is unsecured authorized. The Infinity QX80 had been leased by Steinmetz 30 days following the $3 million buck loan that is unsecured authorized. ”

One portion of the documents filed today states, “The increase of Vista Bank President, John D. Steinmetz, from his times as 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 an associate associated with the Board of Regents for the Texas Tech University System is well chronicled. For a guy forty-one years this is certainly a serious resume. Indeed it is very an application for somebody of every age. As had been the actual situation with Shane Smith, on top, Steinmetz bares all of the trappings of a US success story– down to the shiny luxury vehicle. But like Shane Smith, all had not been since it appeared to be. ”

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

“And it is the key reason why the deals between Smith and Steinmetz are so important- they offer a lens by which view Vista’s subsequent conduct. And Vista’s conduct, whenever seen from a target viewpoint, just can’t 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.

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