Justices with the United States Supreme Court on Monday, Oct. 6, declined to consider Bart Reagor’s appeal of his conviction and 14-year sentence after a jury in Amarillo found him guilty of making a false statement to a bank while applying for a loan.
Reagor, who is being held at a federal prison in Oakdale, Louisiana, filed a writ of certiorari to the U.S. Supreme Court after judges with the U.S. Fifth Circuit Court of Appeals upheld his conviction.
The denial exhausts, at present, his efforts to clear his name.
A federal jury in Amarillo returned a verdict in October 2021 convicting him of a count of making a false statement to a bank. He also faced two counts of wire fraud but jurors acquitted him of the charges.
In March 2022 he was sentenced to 14 years in prison.
The verdict came after a five-day trial before U.S. District Judge Matthew Kacsmaryk, during which jurors heard from International Bank of Commerce president William Schonacher, who said he believed a $10 million loan would be used as working capital for RDAG.
He said he would not have approved the loan had he known Reagor would be using portions of it for his personal use.
Prosecutors presented evidence during the trial that about $1.7 million from the loan was deposited into Reagor’s personal checking account and was used to pay off personal credit cards, to make payments to family and for renovations to his “mansion on 19th Street.”
During the trial, Reagor’s defense attorney argued that his client took the money through the practice of owner distributions, payments made to business owners from a company’s profits or investments.
However, the prosecutor’s experts said that capital loans are typically exempt from owner distributions.
Reagor’s appellate attorney John J. E. Markham, II argued that jurors “impermissibly came to the conclusion that Reagor knew that working capital meant (owner) distributions.”
He said jurors were given definitions of working capital but the definition didn’t matter since prosecutors had to prove Reagor knew he wasn’t allowed to take owner distributions from the loan.
“The matter is what Reagor thought,” Markham told the justices. “It’s a state-of-mind crime.”
He said nothing in the record showed that Reagor told IBC executives that the entirety of the loan would go only to working capital.
In fact, he said the records showed that as IBC agents drafted the loan agreement, RDAG representatives asked them to amend a clause that prohibited owner distributions.
However, in their ruling filed more than two years after the justices heard oral arguments, the justices said jurors were free to accept the definition of working capital used by prosecutors’ experts and reject the definition used by Reagor’s experts.
“We will not second guess the jury in its choice of which witnesses to believe,” the opinion states.
Jurors were also free to consider Reagor’s emails to determine his state of mind.
Making a case against Reagor and RDAG
During the trial, prosecutors also presented email and video evidence that showed Reagor knew he wasn’t supposed to take money from the IBC loan.
In one email, Reagor instructed his former RDAG chief financial officer Shane Smith to transfer about 33% of the IBC loan to his and his partner, Rick Dyke’s, bank accounts.
Reagor further instructed Smith to keep the transfers confidential, saying “How we are going to manage this capital is 100000000% confidential between us and is not ANYONE ELSE’S BUSINESS!!!!!! NOBODY’S!!!!!!!!!!!!! NO BANKERS OR ANYONE ELSE! OUR BUSINESS! GAME ON!!!!!!!!!!!!”
Reagor’s crime was discovered while federal investigators were looking into a separate $50 million fraud scheme that Smith was operating to cheat its creditors out of money.
The scheme resulted in convictions of 15 former RDAG employees.
Smith was sentenced to seven years in prison after pleading guilty to a count of conspiracy to commit wire fraud.
In a video of Reagor’s meeting with his sales team after depositing portions of the IBC loan into his bank account, Reagor could be heard boasting about his wealth.
“When you don’t have money, you talk other people into giving you their money so you can use their money to increase your net worth. That’s how I did it,” Reagor is heard saying.
After the appeal, Reagor’s attorneys filed a writ asking justices of the highest court in the country to consider his case in light of another case they decided that they believe conflicted with the lower appellate court’s ruling in his case
In the latter case, the justices found that the statute Reagor was charged under only criminalized making false statements to banks and not misleading ones.
They argued jurors in Reagor’s trial didn’t have enough evidence to determine whether his statements to International Bank of Commerce officers were false, and not just misleading.
“Reagor’s conviction was thus premised on the idea that his promise to use the loan for working capital, though not overtly false, was partially misleading because Reagor also intended to use some of the loan for owner distributions, while purportedly aware that working capital is entirely distinct from owner distributions,” Reagor’s brief states. “In sum, the Fifth Circuit allowed Reagor’s conviction to stand even though the record below allows only for a finding that he made a materially misleading but not a false statement.”
Meanwhile, appeals attorney for the U.S. Attorney’s Office did not file a response to the Reagor’s brief, according to court records.
This article originally appeared on Lubbock Avalanche-Journal: U.S. Supreme Court declines to hear Bart Reagor appeal in bank fraud case
Reporting by Gabriel Monte, Lubbock Avalanche-Journal / Lubbock Avalanche-Journal
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