LUBBOCK, Texas (KCBD) - A total of nine people have now pleaded guilty for their role in the Reagor-Dykes “fraud scheme,” according to the U.S. Attorney for the Northern District of Texas. The investigation reveals more than $40 million worth of “collateralized inventory that RDAG was unable to produce for inspection,” according to court documents.
Ashley Nicole Dunn was hired by Reagor Dykes Auto Group to be the executive assistant for former Chief Financial Officer Shane Smith in 2014.
The FBI interviewed multiple current and former RDAG employees who confirmed six dealerships submitted fraudulent requests for advances on the floor plan loan.
The investigation revealed at least 19 bank accounts from several banks, involving nine different RDAG entities, had been used to kite checks, according to federal court documents. Dunn admits that she and her co-conspirators kited checks through those 19 accounts to falsely inflate the daily balances of RDAG’s accounts.
After Smith was notified of the anticipated legitimate deposits for the day, he or Dunn would instruct other co-conspirators to the total amount to cut from one account to the other account by the end of the day, usually sending emails such as, “put 550k of blue.” Blue was referring to the color of the check stock from a particular bank. Dunn and co-conspirators made up random amounts for each check to total the amount provided by Smith. The bank accounts usually showed positive balances again by the end of each day due to these checks, according to Dunn’s factual resume of her case.
Brad William Fansler pleaded guilty to conspiracy to commit wire fraud on Monday in an Amarillo federal court. He, like many of the others who have pleaded guilty, communicated through email discussing the fake flooring.
Pepper Laray Rickman, 47, and Sherri Lynn Wood, 53, pleaded guilty to conspiracy to commit wire fraud before Magistrate Jude Lee Ann Reno in Amarillo in late October.
Admitted co-conspirators also include Reagor-Dykes Chief Financial Officer Shane Andrew Smith and employees Sheila Miller, Lindsay Williams, Diana Urias, and Paige Johnston.
In plea papers, Rickman, accounting controller at Reagor-Dykes Plainview LP (a Toyota store in Plainview, Texas), and Wood, office manager at the Reagor-Dykes Auto Company LP (a Ford store in Plainview), admitted the auto group participated in a fraudulent floor plan fraud scheme.
In a practice accounting staff dubbed “dummy flooring,” “fake flooring,” or “re-flooring,” employees dug through records for vehicle identification numbers (VIN) of cars Reagor-Dykes had already sold, then submitted new loan applications to Ford Motor Credit Company using the old VINs – falsely indicating that the company was seeking a loan in order to repurchase the vehicle for resale, Rickman and Wood said in plea papers. After acquiring the new floor plan funding, instead of re-buying the car, Reagor Dykes used the ensuing loan to cover other expenses.
The company’s accounting staff submitted the false information via interstate wire communication, the defendants admitted.
Rickman and Wood each face up to five years in federal prison and may be required to pay at least $27 million in restitution. Their sentencing has been scheduled for March 5, 2020 in Amarillo.
Fansler faces up to five years and a fine not to exceed $250,000 and possible restitution of more than $27 million. His sentencing is scheduled for March 12, 2020 in Amarillo.
Shane Smith’s sentencing was rescheduled for Jan. 7 in Amarillo. He faces up to 20 years in prison, a fine not to exceed $250,000 and possible restitution of more than $50 million.
Sheila Miller’s sentencing has been set for Jan. 23 in Amarillo. She faces up to five years and a fine not to exceed $250,000 and possible restitution of more than $23 million.
Diana Urias’ sentencing has been set for Jan. 23 in Amarillo. She faces up to five years and a fine not to exceed $250,000 and possible restitution of more than $23 million.
Paige Johnston sentencing has been set for Feb. 19, 2020 in Amarillo. She faces up to five years and a fine not to exceed $250,000 and possible restitution of more than $27 million.
Lindsay Williams sentencing has been set for Feb. 19, 2020 in Amarillo. She faces up to five years in prison and a fine not to exceed $250,000, and possible restitution of more than $23 million.
Ashley Dunn faces up to five years in prison, a fine not to exceed $250,000 and possible restitution of more than $23 million. Her sentencing has not been set.