FirstCapital Bank responds to suit for $6M: Vista Bank is “weaponizing the judicial system”

LUBBOCK, TX (KCBD) - FirstCapital Bank has filed a response with the courts to answer Vista Bank's accusation FirstCapital used insider information from Rick Dykes to use a check-kiting scheme to obtain millions of dollars.

"This is a lawsuit which asserts claims that are without merit either in law or in fact. FirstCapital Bank utilized legally appropriate procedures available through the bank collection process to return checks presented by Vista Bank to FirstCapital for payment and which FirstCapital was legally entitled to reject. As always, we will continue to act in the best interest of our shareholders, customers, team members and communities," said FirstCapital Bank's Chief Marketing Officer Katie Boyd in an emailed response.

FirstCapital says the two banks are competitors and they do not owe fiduciary duties to one another.

In the court documents filed by FirstCapital, they say Vista Bank accused them of "weaponizing" the check clearing process. They, in turn, accuse Vista Bank of weaponizing the judicial system.

Their set of facts say after regular business hours on Tuesday, July 31, FirstCapital received an unsolicited phone call and visit from Rick Dykes and his attorney, David Langston. Langston is representing Reagor-Dykes in their bankruptcy. Dykes and his attorney told FirstCapital that Ford Motor Credit discovered issues surrounding Reagor-Dykes' floor plan financing and Ford says Reagor-Dykes owes around $39 million. The documents say in the late evening meeting, there were discussions that Reagor-Dykes' Chief Financial Officer might be kiting Reagor-Dykes checks.

Also that night, during their late meeting, according to the court document, Ford filed their federal lawsuit seeking more than $116 million in Reagor-Dykes debt with $41 million currently due.

After learning Ford filed a federal lawsuit, that same night, FirstCapital began investigating their exposure to Reagor-Dykes. The documents say FirstCapital determined it had given provisional credit for a number of checks presented for payment to FirstCapital on July 30 for checks drawn on Reagor-Dykes accounts at Vista Bank."

On Aug. 1, around 9 a.m., the court documents say FirstCapital reviewed a copy for Ford's lawsuit. About an hour later, six Reagor-Dykes entities publicly filed for bankruptcy relief.

"The allegations of the Ford Motor Credit lawsuit and the filing of the Reagor-Dykes bankruptcies were matters of great concern to FirstCapital."

Also that day, like other banks in town, FirstCapital began the process of dishonoring and returning checks. They say Vista Bank did the same, to protect its interest.

FirstCapital states in the documents some of the returned checks that were Vista Bank checks presented to FirstCapital for payment on July 30 totaled $2.7 million.

"As it pertains to those checks, there is a process for Vista Bank to follow with the Federal Reserve to assure that Vista Bank receives credit for those checks if they were untimely presented to the Federal Reserve. For reasons unknown to FirstCapital, Vista Bank apparently has not pursued that process, as various other banks have done."

FirstCapital also received checks that were presented for payment by Vista Bank on July 31 totaling more than $2.8 million, according to the court document. FirstCaptial dishonored those checks and returned them to the Federal Reserve on the afternoon of August 1.

FirstCapital says on August 2, they processed the dishonor and return of Vista Bank checks presented on August 1.

The total of checks presented to FirstCapital for payment by Vista Bank on Reagor-Dykes checks on July 31 and August 1, according to FirstCapital, equaled more than $6.2 million.

FirstCapital says those checks were properly and timely dishonored at a point in time after Ford filed suit, after six Reagor-Dykes entities filed for bankruptcy and the general public started becoming aware of the Reagor-Dykes situation.

"Far from acting on insider, non-public information -- which has no legal applications in this setting anyway -- FirstCapital followed regular banking procedures to dishonor and return the checks presented for payment on July 31 and August 1."

FirstCapital denies each allegation of Vista Bank's original petition.

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