Federal prosecutors are accusing four executives from defunct subprime auto lender Tricolor Holdings of defrauding investors.
In an indictment unsealed Tuesday (Dec. 16), the U.S. Attorney’s Office alleged that Tricolor founder and CEO Daniel Chu and chief operating officer David Goodgame took in billions of dollars from investors and lenders between 2018 and 2025 by misrepresenting the value of the company’s loan collateral.
The executives, who were arrested Tuesday, are accused of repeatedly lying to lenders, including by falsifying auto-loan data so that delinquent loans seemed eligible for financing. The executives are also accused of “double pledging” collateral by repeatedly promising the same auto loans to more than one vendor at the same time.
“Fraud became an integral component of Tricolor’s business strategy. The resulting billion-dollar collapse harmed banks, investors, employees and customers,” U.S. Attorney Jay Clayton said in a news release.
Two other former Tricolor figures — CFO Jerome Kollar and finance executive Ameryn Seibold — have pleaded guilty to fraud and are cooperating with the government, the release added.
According to the indictment, Trilcolor had as of the summer of 2025 pledged approximately $2.2 billion of collateral to lenders and investors, but had only about $1.4 billion of real collateral.
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When confronted by creditors, Chu and others allegedly came up with plans to “conceal or explain away” the fraud, the release added, citing a series of secretly recorded calls. For example, Chu suggested blaming certain loan data discrepancies on phony deferment policies.
In another call, Chu and others floated the idea of blaming banks for ignoring red flags and using that threat to gain a favorable settlement. Executives also allegedly compared the situation to that of Enron.
Chu, 62, faces life in prison if convicted of the most serious charge against him — operating a “continuing financial crimes enterprise” — and decades in prison if found guilty of bank fraud, wire fraud and conspiracy. The remaining defendants could all face several years in prison.
Tricolor filed to liquidate in bankruptcy in September, soon after a number of banks acknowledged that they had uncovered fraudulent activity at the borrower.
During an earnings call weeks later, JPMorgan Chase CEO Jamie Dimon — whose bank reported $170 million in chargeoffs partially due to the Tricolor collapse — cautioned that the company’s implosion could be part of a larger trend in the industry.
“When you see one cockroach, there are probably more,” Dimon said. “Everyone should be forewarned on this one.”
