Tricolor executives face SEC fraud charges following $1.9 billion collapse

The Securities and Exchange Commission (SEC) has filed charges alleging that executives at Tricolor, a Texas-based subprime auto lender, engaged in a multiyear fraud that contributed to the company’s $1.9 billion collapse. The lender, which specialized in providing loans and vehicle sales to individuals without Social Security numbers or credit histories, filed for bankruptcy in September 2025.

According to the SEC, former CEO Daniel Chu and other executives misled investors regarding the company’s financial health while facing severe liquidity constraints. The allegations include the use of bogus collateral to defraud investors. This follows a previous indictment from the U.S. Attorney for the Southern District of New York, which accused executives of “double-pledging collateral” by pledging the same assets to multiple lenders simultaneously.

The indictment further alleges that Chu directed executive Jerome Kollar to pay him $6.25 million in bonuses as the company was collapsing, funds which were allegedly used to purchase property in Beverly Hills. Kollar has pleaded guilty to fraud charges and is cooperating with investigators.