SEC Alleges Tricolor Executives Fueled $1.9 Billion Fraud
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The SEC alleges in charges announced Tuesday that executives at Texas-based subprime auto lender Tricolor fueled the company's $1.9 billion collapse through a multiyear fraud. Former CEO Daniel Chu and other top executives are accused of misleading investors about severe liquidity constraints while raising nearly $2 billion from 2020 through the company's bankruptcy.
Key Facts
- The SEC alleges Tricolor raised nearly $2 billion from 2020 through its September 2025 bankruptcy while executives misled investors about the company's liquidity.
- Former CEO Daniel Chu directed another executive, Jerome Kollar, to pay him $6.25 million in bonuses as Tricolor collapsed, and he used some of the money to purchase a multimillion-dollar property in Beverly Hills.
- Jerome Kollar pleaded guilty to fraud charges and cooperated with the investigation.
- JPMorgan Chase said last year it would take a $170 million hit from its dealings with Tricolor.
SEC and Criminal Allegations
The SEC filed its complaint in the Southern District of New York on Tuesday, alleging that Tricolor executives defrauded investors based on bogus collateral and violated the integrity of private credit markets. David Woodcock, director of the SEC's Division of Enforcement, said the defendants 'defrauded investors based on bogus collateral' and violated the integrity of private credit markets. From at least 2020 through its September 2025 bankruptcy, Tricolor raised nearly $2 billion while top executives portrayed the company as sound despite severe liquidity constraints. Two months after the bankruptcy, the US attorney for the Southern District of New York unsealed an indictment alleging Chu and other executives 'repeatedly defrauded lenders' through double-pledging collateral. The indictment also alleged that Chu directed Jerome Kollar to pay him $6.25 million in bonuses as Tricolor collapsed last summer, and Chu used some of the money to purchase a multimillion-dollar property in Beverly Hills.
Executive Actions and Market Impact
Weeks later, Tricolor placed more than 1,000 employees on unpaid leaves of absence and filed for bankruptcy. Kollar pleaded guilty to fraud charges and cooperated with the investigation. Chu's lawyer, Matthew Schwartz, called the SEC case a 'rehash of allegations' and said many are inaccurate, promising a full hearing in court. Last year, JPMorgan Chase said it would take a $170 million hit from its dealings with Tricolor. In October, JPMorgan CEO Jamie Dimon said Tricolor's bankruptcy set his 'antenna' up, adding that 'when you see one cockroach, there are probably more.'
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SEC Alleges Tricolor Executives Fueled $1.9 Billion Fraud
