Tricolor Auto Lender Executives Face “Systematic Fraud” Charges After Company’s Fall
What Happened to Tricolor Holdings?
Tricolor Holdings, a subprime auto lender targeting customers with poor credit, collapsed into bankruptcy in September 2025 after shutting down over 60 locations in the US Southwest. Federal prosecutors in Manhattan charged founder and CEO Daniel Chu, along with former executives David Goodgame (COO), Jerome Kollar, and Ameryn Seibold, with orchestrating systematic fraud since 2018. The schemes defrauded lenders out of billions by misrepresenting collateral on auto loans. (CNBC) (DOJ)
Who Got Charged and Why?
Daniel Chu directed multiple frauds, including double-pledging the same auto loan portfolios to banks like JPMorgan Chase, Fifth Third Bancorp, and Barclays, making lenders advance funds on overvalued or duplicate assets. Goodgame faces charges for a continuing financial crimes enterprise, carrying up to 10 years in prison; Kollar and Seibold already pleaded guilty. Prosecutors noted Tricolor classified “near-worthless” assets to meet lender rules. (Bloomberg Law) (ABC News)
Assistant New York FBI Director Christopher Raia stated at a press conference, “Tricolor defrauded multiple lenders, they told multiple lies and most disturbingly the direction to do it came from the top.” (Bloomberg Law)
How Did the Fraud Work?
Executives maintained inflated borrowing data, pledged 29,000 loans twice to different banks, and manipulated descriptions to hide risks in subprime portfolios sold as asset-backed securities worth nearly $2 billion since 2022. Lenders discovered discrepancies in late August 2025 during collateral checks, exposing the schemes. Tricolor originated loans without strict credit checks, bundling them for warehouse lines that fueled operations. (WSJ) (Dealership Guy)
What Impact Hit the Banks?
Banks faced hundreds of millions in losses; Fifth Third disclosed up to $200 million impairment from the fraud. JPMorgan and Barclays probed double-pledged collateral on securitized bonds, prompting federal investigations. The scandal raised alarms in subprime auto finance, with JPMorgan CEO Jamie Dimon warning of broader risks: “When you see one cockroach, there’s probably more.” (AInvest) (Bloomberg) (Cobalt Intelligence)
When Did Charges Unseal?
The indictment unsealed December 17, 2025, in Manhattan federal court followed months of probes after Tricolor’s bankruptcy filing. Chu and Goodgame await arraignment; Kollar and Seibold cooperated post-guilty pleas. No immediate comments from defendants. (CNN) (NBC News)
