A federal jury in Lubbock has awarded $53.7 million to the financial services arm of Ford Motor Company in a damages trial related to one of the nation’s largest auto-dealer frauds.
In a unanimous verdict, the jury ordered Bart Reagor, a principal of Texas’ now-bankrupt Reagor-Dykes Auto Group, to pay the multimillion-dollar judgment to Ford Motor Credit Co. for his involvement in the fraud. The jury deliberated for one hour before returning its 12-0 verdict.
Ford Motor Credit sued six of the Reagor-Dykes dealerships, Reagor and his co-principal, Rick Dykes, in July 2018 after discovery revealed that the dealerships had defrauded the automotive financing company. The dealerships are all located in West Texas.
The dealerships sold more than 1,100 vehicles — which they acquired with $41 million in Ford Credit financing — without repaying Ford Credit. The failure to repay was part of a a scheme in which the dealerships reported false financial information to Ford Credit. They also sought financing on the same vehicles multiple times (called “double-flooring” in the auto industry), requesting financing on already-sold vehicles.
The auto group filed for Chapter 11 bankruptcy protection after Ford Motor Credit filed its lawsuit, but Dykes and Reagor remained on the hook individually since they personally guaranteed to pay Ford Credit for the dealerships’ debts.
Dykes, who was represented by The Woodlands lawyer Tom Kirkendall, settled with Ford Motor Credit this spring for $58.7 million. In May, U.S. District Judge Samuel E. Cummings of the Northern District of Texas issued a summary judgment that found Reagor liable. Last week’s verdict, which came down Thursday, was the result of a trial that only determined how much Reagor would owe.
The $53.7 million the jury hit Reagor with accounts for everything Ford Motor Credit’s lead lawyer, Michael Goldberg of Baker Botts, asked them to award. Reagor’s lawyer, Marshall Searcy of Kelly Hart & Hallman, asked the jury to only award $2 million max.
Neither lawyer could comment on the verdict.
Judge Cummings wrote in the jury charge that “Mr. Reagor denies he owes” the $53.7 million “and asserts that Ford Motor Credit has failed to establish this amount by a preponderance of the evidence.”
The judge has ordered the parties to submit affidavits so he can determine the appropriate attorneys’ fees to add to the verdict.
Three other employees at the Lubbock-based auto group, including former CFO Shane Smith, pleaded guilty earlier this year to conspiracy to commit wire fraud involving fake floor-planning vehicles, as well as check kiting schemes. They await sentencing.
In addition to Goldberg, the Texas-based Baker Botts team that represented Ford Motor Credit in the Reagor trial also included Houston associate Shayna Goldblatt, Dallas partner Jessica Pulliam and Dallas associate Christopher Hunt. Buffalo, New York-based attorneys Craig Leslie and Jacob Sonner were also on the Ford trial team.