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

LUBBOCK, Texas (KCBD) – court papers filed Wednesday because of the court appointed counsel that is special 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 automobiles. While this had been taking place, court papers state 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 roughly $150,000 in subsidized luxury vehicle leases for his individual usage, funded by Debtors), while on top of that he and Vista Bank at large benefited through the huge bank charges it accumulated in addition to 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 merely enabling CFO Smith’s continued fraudulence. ”

“Vista knew the character plus the degree of Shane’s schemes that are fraudulent. Definately not stopping them, they took active measures to aid Smith carry down their schemes, ” according to your documents.

Listed here are excerpts through the court papers released today:

• 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 familiarity with whenever Ford engine Credit https://fastapprovalpaydayloans.com business audits were planning to take place. Based on the disparity of reported sales and EFT that is actual to FMCC, Vista additionally totally possible knew that Smith had been regularly causing automobiles become sold out of trust. Vista and Toby Cecil knowingly assisted Shane Smith together with his witchery that is financial by him conjure the monies required to repay FMCC that the dealerships did have and through adept utilized of both the check clearing procedure while the apparently limitless revolving personal credit line that Vista called a need deposit account.
• Aggregate size of deposits 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 day, Lmitsu, RDT and RDAC will make big intercompany deposits to endeavor to cure these overdrafts in order for a provided account would complete the time having a balance that is positive.
• . Smith commented to Cecil he had “lots of dishes spinning. ” Cecil reacted to Smith’s e-mail by noting: “I don’t discover how they are kept by you the plates all rotating: )” (Note: Toby Cecil could be the Vista Bank Lubbock marketplace President.
• Vista Bank’s computer system told Vista exactly what Shane Smith ended up being doing.
• Shane Smith told Vista Bank Officers exactly what he had been doing.
• Cecil and Luman might have tellers waiting after hours for a dealership employee to reach with big intercompany checks become deposited. Cecil and Luman would instruct the tellers exactly how to put on the memo-posted credits and to which reports. Towards the conclusion of this scheme here would multiple vast amounts deposited via belated cabinet memo post as well as on regular or even day-to-day basis.
• . Account balances seem to other people as bigger than they really had been.
• #Respectthehustle: Steinmetz Seeks Help of Investment Bankers To Greatly Help Dealerships Plug The Opening. As ended up being their training, on or just around might 7, 2018, Shane Smith delivered a quarterly company review for the very first quarter of 2018 to any or all associated with the Debtor dealerships’ bankers including John Steinmetz and Toby Cecil. Nevertheless, and notwithstanding these apparent signs of impending monetary doom, Steinmetz reacted to Smith’s upgrade via e-mail dated might 8, 2018 and also as follows: “Incredible!! Congrats to your Greatest car Group on the planet. #respectthehustle” It goes without stating that Steinmetz was truly “respecting the hustle” as he received a number of luxury vehicle leases that have been greatly subsidized by Smith through direct money re payments through the dealerships.

The document defines exactly just how, “Steinmetz, for himself along with his family members, was able to rent listed here automobiles just for 36 % regarding the quantity he was otherwise obligated to cover: (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 bankruptcy petition in direct rent payments to a renting business and for the good thing about John Steinmetz and against an obligation of $228,150. ”

Over time, the automobiles increased in quality, the court papers state. “In the months which preceded the bankruptcy, Smith and Steinmetz had been in active discussions regarding acquiring an Aston Martin (of James Bond popularity) for Mr. Steinmetz’s utilize. The of the deal, but presumably it could have now been under comparable terms since the five other car leases. ”

The papers note a few circumstances for which brand new leases had been signed at or about the time that is same big unsecured records had been authorized by the bank.

“In particular it must be noted that Steinmetz obtained additional leases over summer time of 2017. The timing associated with 2017 leases had been particularly suspect, while they took place close to enough 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 had been frequently overdrawn by thousands and thousands of bucks. Suffice it to state, the Leases for the 2016 BMW 750i Xdrive and 2016 Toyota Land Cruiser had been performed just one single thirty days ahead of the $3 million buck unsecured loan was authorized. The Infinity QX80 had been leased by Steinmetz a month following the $3 million buck unsecured loan had been approved. ”

One element of the papers filed today says, “The increase of Vista Bank President, John D. Steinmetz, from their times being a junior banker with Plains Capital Bank, to Lubbock County Republican Party Chair, then as President of Vista Bank and ultimately to successive appointments as an associate associated with Board of Regents associated with Texas Tech University System happens to be well chronicled. For a guy forty-one years this is certainly a serious resume. Certainly it is fairly an application for somebody of every age. All the trappings of an American success story– right down to the shiny luxury car as was the case with Shane Smith, on the surface, Steinmetz bares. But like Shane Smith, all wasn’t since it appeared to be. ”

Court papers additionally describe many years of email messages between RDAG CFO Shane Smith and bank officers regarding overdrafts and unconventional hours kept to ensure after-hours bank deposits could possibly be created by RDAG suggesting a causal relationship between the favors done for Steinmetz while the bank’s habitual tolerance of RDAG overdrafts.

“And it is precisely why the transactions between Smith and Steinmetz are incredibly important- they offer a lens by which view Vista’s conduct that is subsequent. And Vista’s conduct, whenever seen from a target viewpoint, just can’t be explained except because of the conclusion 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 into the bankruptcy instance.