Court documents say Reagor-Dykes fraud could be among largest in U.S. history
AMARILLO, Texas —
In new court documents filed on Thursday, Ford Motor Credit says Reagor-Dykes Auto Group ran one of the "largest floor-plan financing frauds in the history of the United States."
Ford Motor Credit is requesting the U.S. Bankruptcy Court appoint a trustee to oversee the Chapter 11 filing, claiming Reagor-Dykes committed acts of fraud and gross mismanagement.
The new documents explain vehicles sold "out of trust," or not within the standard seven days for a floor plan financed vehicle, creates an unsecured debt the dealer owes to the finance company. On average, 25.02% of Reagor-Dykes inventory was listed as "Sold Not Due," meaning those vehicles were sold days earlier and money was not yet due to Ford Motor Credit. Ford says this means Reagor-Dykes either sold that inventory within the last week, or they were falsifying their sales dates. Through government records, investigators with Ford Motor Credit determined 147 out of 150 sales dates reported by Reagor-Dykes were falsified. Ford Motor Credit says on average, there was a discrepancy of 55 days between reported sales dates and Texas DMV records.
Ford Motor Credit also claimed there were 16 double-floored vehicles. The company said "one of Debtors' dealerships (Store A) represents to Ford Credit that it purchased a Ford Explorer for $40,000. In response, Ford Credit advances $40,000 in acquisition financing to Store A. But then, unbeknownst to Ford Credit, Store A transfers the Ford Explorer to another of Debtors' dealerships (Store B). Store B then fraudulently represents to Ford Credit that it has purchased a Ford Explorer for $40,000, which prompts Ford Credit to advance an additional $40,000 in financing to Store B."
In addition, Ford Motor Credit claims other financers advanced $3.7 million to Reagor Dykes for acquisition of 115 vehicles that were already floored by Ford Motor Credit.
Ford Motor Credit is asking the court to expedite the hearing to appoint a trustee, and hear their motion during the hearing already scheduled for August 16.