Federal prosecutors in New York have unsealed an indictment against the founder and former chief executive of Tricolor Holdings, a now-bankrupt subprime auto lender. The executive, Daniel Chu, is accused of orchestrating a systematic, years-long fraud that misled investors and financial institutions.
According to the indictment, from at least 2018, Chu directed other company executives to carry out schemes designed to deceive creditors. The alleged tactics included falsifying data related to auto loans and improperly pledging the same collateral to secure multiple loans, a practice known as “double pledging.”
Authorities state that fraud became a core part of the company’s operations. The subsequent collapse of Tricolor, which filed for Chapter 7 bankruptcy in September, resulted in approximately $900 million in debts to its largest lenders. Prosecutors allege the fallout harmed banks, investors, employees, and customers.
The indictment further claims that when lenders began questioning the company’s collateral earlier this year, Chu attempted to conceal the misconduct. After those efforts failed, he is alleged to have withdrawn over $6 million from the company. Prosecutors say a portion of those funds was used to purchase a high-value property in Beverly Hills, California.
A lawyer for Chu could not be immediately reached for comment. The case highlights ongoing scrutiny of the private credit sector.