"The founder of Tricolor Holdings led other top executives of the subprime auto lender on a seven-year campaign to defraud its largest lenders out of nearly $1 billion, authorities said Wednesday, as they announced two arrests and guilty pleas by two former executives. Daniel Chu, the company's founder and chief executive, was charged in an indictment unsealed in Manhattan federal court"
"According to the indictment, the scope of the fraud was revealed in late August when lenders confronted Chu and other executives about Tricolor's collateral. Chu and others accused of carrying out the fraud initially tried to conceal it, saying the collateral issues were due to an administrative error, the indictment said. After those efforts failed, Chu extracted over $6 million from the company, spending some of it on the August purchase of a multimillion dollar property in Beverly Hills, California, the indictment said."
Tricolor Holdings engaged in a seven-year scheme that defrauded lenders of nearly $1 billion, using fabricated data and false statements. Founder and CEO Daniel Chu directed multiple executives since 2018 to deceive investors and lending institutions, according to charges. The scheme collapsed after lenders confronted executives about collateral in late August; company officers initially blamed an administrative error. Chu allegedly extracted over $6 million from the company and spent part on a Beverly Hills multimillion-dollar property. Two arrests were announced, including Chu and former COO David Goodgame, and two former executives pleaded guilty. The collapse harmed customers who rely on subprime auto lending.
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