Explosive allegations and language surfaced on Tuesday via the unsealing of a Justice Department indictment charging Daniel Chu, the founder and former CEO of Tricolor Holdings with orchestrating a years-long financial crimes enterprise that defrauded multiple banks and other private credit providers.

Officials said Chu and David Goodgame, Tricolor’s former COO, were also charged with bank fraud and wire fraud offenses in connection with schemes to fraudulently double-pledge collateral to multiple lenders and manipulate the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements.

Both defendants were arrested on Tuesday, according to a Justice Department news release.

Also unsealed were the guilty pleas of former Tricolor CFO Jerome Kollar and Ameryn Seibold, a former finance executive at Tricolor, in connection with their participation in the conspiracy.

Officials said Kollar and Seibold pled guilty to fraud charges before U.S. District Judge Lewis J. Liman on Tuesday. Both are cooperating with the government, according to the news release.

“As alleged in the indictment, CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor,” U.S. attorney Jay Clayton said.  “At his direction, Tricolor repeatedly lied to banks and other credit providers, including by falsifying auto-loan data and ‘double pledging’ collateral. Fraud became an integral component of Tricolor’s business strategy.

The resulting billion-dollar collapse harmed banks, investors, employees and customers. It also undermines confidence in our financial system. New Yorkers and all Americans want continuing criminal enterprises shut down and their leaders brought to justice whether they are on our streets or in our markets,” Clayton continued.

An array of serious allegations contained in the indictment were unsealed in Manhattan federal court

From in or about 2018 through in or about 2025, Chu, Goodgame, Kollar, and Seibold conspired to defraud the lenders and asset-backed securities investors of Tricolor Holdings and its affiliates, which collaborated to be a subprime auto retailer and financing company.

Officials alleged that Chu, Goodgame and others operated Tricolor through systematic fraud.  At Chu’s direction, multiple Tricolor executives repeatedly double-pledged collateral to multiple lenders and manipulated the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements, according to the indictment.

By in or about August, Tricolor had pledged approximately $2.2 billion of collateral to lenders and investors, but Tricolor had only approximately $1.4 billion of real collateral.

“The difference — consisting of approximately $800 million in bogus collateral — resulted from the series of schemes and the conspiracy in which Chu, Goodgame, Kollar, Seibold, and others participated,” the Justice Department said. “Over time, this series of fraudulent schemes had a profound effect on Tricolor, which obtained hundreds of millions of dollars in cash advances; on Chu, who used a portion of the funds to enrich himself; and on Tricolor’s lenders, who extended billions in loans based on fabricated data and false statements.”

Then this summer, officials said lenders confronted Chu and others at Tricolor about problems with Tricolor’s collateral.

In a series of secretly recorded phone calls, officials said Chu and his conspirators concocted plans to conceal or explain away the fraud.

“For example, on or about Aug. 17, 2025, Chu proposed blaming certain loan data discrepancies on fictitious deferment policies,” officials said. “Chu acknowledged, however, that ‘where we would have an issue is if, if they sent an auditor and they said, pull this up on your screen, right, that would be a problem.’  Kollar agreed, stating, ‘Yes. That would be bad.’ These efforts to conceal failed.

“Unable to explain or excuse Tricolor’s fraud, Chu turned his sights on blaming others,” officials continued. “On another recorded phone call, Chu compared Tricolor’s circumstances to the circumstances of Enron, the energy trading firm that collapsed into bankruptcy following the discovery of accounting fraud and other misconduct.  Specifically, Chu and others discussed the possibility that they could blame the banks for ignoring red flags and use that threat as leverage to extract a favorable settlement.

“Chu proposed using artificial intelligence tools to search for key words that Goodgame could use in a discussion with a lender,” officials added. “After another participant described an Enron-related litigation, Chu stated: ‘Enron obviously has a nice ring to it, right? <laugh>, I mean, Enron, Enron raises the blood pressure of the lender when they see that <laugh>.  It, it has to, right? I’m not— […] Cause who wants to be thrown in the category?’  Chu later said, ‘That Enron case is fucking perfect, I think.’

“Chu, recognizing that Tricolor was, in his words, ‘basically history,’ turned his attention to extracting millions of dollars from the company,” officials went on to say. “As Tricolor approached collapse, and after Chu observed that the company was ‘definitely insolvent,’ he directed Kollar to pay him the final installments of a $15 million bonus.  On or about August 19 and 20, 2025 — roughly three weeks before Tricolor placed more than 1,000 employees on unpaid leaves of absence and before the company filed for bankruptcy — Chu received two payments from Tricolor totaling $6.25 million. Chu used some of this money to purchase a multimillion-dollar property in Beverly Hills, California on or about August 27, 2025.”

Unable to maintain its access to loans, and unable to sustain its business without substantial cash, Tricolor filed for Chapter 7 bankruptcy on Sept. 10.  By that time, officials said the company’s largest lenders had advanced and were owed more than $900 million as a result of the fraudulent double-pledging and collateral manipulation schemes that Chu had orchestrated, and in which Goodgame had knowingly participated as the company’s chief operating officer, for years.

“These four executives allegedly conspired to defraud lenders based on bogus collateral,” FBI assistant director in charge Christopher Raia said in the news release.  “The defendants’ alleged manipulation not only ripped off multiple banks but also violated the integrity of our credit markets. The FBI will never tolerate any company that makes fraud part of its business.”

“As alleged, the defendants in this case participated in a years-long fraudulent scheme that deceived the lenders of Tricolor,” FDIC-OIG special agent in charge Patricia Tarasca said.  “The FDIC-OIG stands firm in its commitment to working with our law enforcement partners to investigate all allegations of fraud that target financial institutions, as we seek to preserve the integrity of our nation’s financial system.”