"By August 2025, top executives of auto lender Tricolor knew they were in trouble: The company had pledged approximately $2.2 billion of collateral to lenders and investors, but only had approximately $1.4 billion of real collateral, Manhattan federal prosecutors said on Wednesday. Founder Daniel Chu and the company's Chief Operating Officer David Goodgame, who were arrested and charged with bank fraud and wire fraud on Wednesday, planned to frighten at least one lender into a favorable deal, prosecutors allege."
"According to the indictment, the executives discussed telling a lender that the company might otherwise implode, much like the energy trading firm Enron in 2001, if a deal wasn't reached. This would be bad for the lender because it would put them at risk of losing everything. "Enron obviously has a nice ring to it, right?" Chu said when discussing with other Tricolor executives how to deal with one particular lender who had figured out the double-pledging issue."
By August 2025, Tricolor executives had pledged about $2.2 billion of collateral while holding roughly $1.4 billion of real collateral. Founder Daniel Chu and COO David Goodgame were arrested and charged with bank fraud and wire fraud. The indictment alleges they planned to frighten at least one lender into a favorable deal by warning the company might implode like Enron if a deal was not reached. Recorded conversations included executives referencing Enron. Prosecutors allege a years-long scheme to double-pledge assets and defraud banks and private credit providers, contributing to hundreds of millions in lender losses after a Chapter 7 filing.
Read at Business Insider
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