Two Reagor Dykes Auto Group employees have pleaded guilty as part of a $23 million "check kiting scheme," the office for U.S. Attorney for the Northern District of Texas Erin Nearly Cox said Friday.
Sheila Evans Miller, a controller, and Diana Herrera Urias, an office manager, pleaded guilty Friday to conspiracy to commit bank fraud. The two are accused of cross-depositing checks between two or more accounts to artificially inflate account balances. They face up to five years in prison and could be required to pay at least $23 million in restitution, Cox's office said in a release.
The pleas come about three months after the Texas dealership group's CFO, Shane Smith, pleaded guilty to similar charges. Smith is to be sentenced Oct. 1 in U.S. District Court for the Northern District of Texas. He faces up to 20 years in prison and will be required to pay mandatory restitution of more than $50 million, Cox's office said.
According to the U.S. attorney's office, Miller and Urias said in plea papers that they and others would make up random amounts for each check to total the amount that needed to be "kited' on a given day, often discussing the sums via email.
Miller and Urias admitted that the auto group, "which was struggling with ballooning expenses due to aggressive growth, above market compensation and unnecessary overhead," engaged in widespread check-kiting fraud, the U.S. attorney's office said. "In fact, the company had an entire team at its headquarters specifically designated to kite checks, both women admitted," Cox's office said.
Reagor Dykes imploded last summer after Ford Motor Credit Co., and then other lenders, sued, alleging rampant floorplan fraud. Ford Credit has said it's owed more than $112 million. Dealership co-principal Rick Dykes agreed in April to a $58.7 million consent judgment in Ford Credit's civil suit. Ford Credit has sought a $45.3 million judgment from Bart Reagor, but Reagor has objected to that amount. A trial in that case is set for early October. Neither co-principal has been charged with a crime.