Federal securities regulators have accused three former top executives of Tricolor Holdings of a multiyear scheme to mislead investors about the subprime auto lender’s financial health by double-pledging hundreds of millions of dollars in auto loans and disguising delinquent or worthless loans as legitimate collateral.
This week, the Securities and Exchange Commission filed a civil complaint against Tricolor founder and former CEO Daniel Chu, former chief financial officer Jerome Kollar, and former senior director of finance Ameryn Seibold. The case is the latest fallout from Tricolor’s abrupt collapse and its Chapter 7 bankruptcy filing in late 2025.
Tricolor Holdings was founded in Dallas and served as a subprime lender and used-car retailer, focusing heavily on Hispanic consumers with limited or no credit histories. It operated dealerships beyond Dallas and across multiple states before its bankruptcy.
The SEC alleged that from at least 2020 until its September 2025 bankruptcy, Tricolor raised more than $1.9 billion through asset-backed securities offerings while making numerous false and misleading representations to investors about the lender’s overall financial health. The executives portrayed the company as financially sound, even though they knew Tricolor faced significant liquidity constraints and was struggling to fund its operations.
Among the allegations, regulators said Tricolor told investors that auto loans packaged into securities were free of other liens, even though many of the loans had already been pledged — or would soon be pledged — to other securities offerings or lenders.
The SEC also alleged that executives deceived underwriters and investors by manipulating loan data to make delinquent and defaulted loans appear current. The company also included fictitious loans in collateral pools and altered financial results to make Tricolor appear healthier than it was.
By the time the company collapsed, the alleged deception and manipulation had created an approximately $800 million hole in Tricolor’s collateral base, “and spelled certain doom for Tricolor,” according to the SEC complaint. More than $945 million in principal remained outstanding across seven Tricolor asset-backed securities offerings when the company entered bankruptcy, according to SEC records.
“We allege that these defendants defrauded investors based on bogus collateral and violated the integrity of our private credit markets,” SEC Enforcement Director David Woodcock said in announcing the complaint.
The 39-page complaint filed in U.S. District Court for the Southern District of New York detailed years of internal communications that regulators contend demonstrated that executives knew the company’s financial reports and collateral representations were inaccurate.
In July 2022, for example, the SEC alleged Chu asked Kollar whether delinquency data could be manipulated for loans more than 60 days past due. Kollar responded that he and Seibold could “work magic” by altering the information to show those delinquent loans as current. By November, four months later, Kollar allegedly told Chu that manipulating delinquency data generated an additional $1.3 million in funding.
The SEC also alleged that Chu and Kollar manipulated quarterly financial results by deferring inventory losses and altering fair-value models to meet lending requirements and “artificially enhance the appearance of Tricolor’s financial performance.” During a 2022 audit, they allegedly booked about $100 million in bad-debt adjustments to reflect fictitious collateral. According to the complaint, those manipulated adjustments were carried forward into subsequent financial statements and disclosed to potential investors and lenders.
Internal communications cited by regulators indicate that Tricolor’s liquidity problems from 2022 to 2025 worsened due to rising interest rates and used-car costs, as well as rising auto subprime loan delinquencies that financially squeezed the business.
In September 2023, Seibold allegedly wrote that Tricolor badly needed another securitization because nearly all its warehouse credit facilities had “capped out,” reaching their limits. The SEC alleged that Tricolor nevertheless continued to portray itself to potential investors as having strong access to capital.
The alleged manipulation continued into 2025.
In one of the SEC’s most striking double pledge allegations, Kollar instructed an employee on June 17, 2025, to include the same 3,225 auto loans as collateral in two separate Tricolor securitizations — one issued in 2022 and another in June 2025.
A financial institution not identified in the complaint analyzed Tricolor’s books and uncovered about $365.5 million in loans that had been double-pledged to Tricolor securitizations, including about $49 million associated with the company’s most recent 2025 offering, according to the complaint.
The SEC said the scrutiny intensified after lenders discovered the loans were reported as current even though their principal balances had not declined for months. In fact, one analyst identified $63 million in loans that had received no payments for 180 days but were still listed as current, according to the complaint.
Regulators alleged Chu and other executives then discussed problems with the discrepancies and ways to “claim that a system error caused the data anomalies.” Chu “asked for help finding an explanation — other than the truth — that they could give to the lenders that would be believed.”
The SEC complaint said that on Aug. 19, 2025, Chu told a representative of a financial institution that a system problem must have caused the questionable data. The complaint said Chu “began feigning ignorance of the double pledging, the inclusion of dead loans and other ineligible collateral in the warehouses and securitizations, and of other data tape manipulations.”
By Aug. 27, a week later, the SEC alleged that Chu told another lender he was shocked by the manipulation and blamed Kollar for altering borrowing-base reports to address cash-flow shortfalls.
Regulators, however, alleged that Chu had directed the fraudulent scheme since at least 2020.
The SEC is seeking injunctions, repayment of allegedly ill-gotten gains with interest, and civil penalties against all three defendants. It also seeks to bar Chu and Kollar from serving as officers or directors of publicly reporting companies.
Chu’s attorney, Matthew L. Schwartz of Boies Schiller Flexner, has disputed the allegations, Reuters reported. In a statement, Schwartz called the SEC’s case a “rehash” of prior allegations, many of which are inaccurate.
“We look forward to a full and fair hearing in the courtroom,” Schwartz said.
An attorney for Seibold declined to comment to Reuters. An attorney for Kollar did not immediately respond to the news organization’s request for comment.
The SEC case has run parallel to a federal criminal investigation.
In December 2025, federal prosecutors in the Southern District of New York in Manhattan charged Chu and former Tricolor chief operating officer David Goodgame with wire fraud, bank fraud, and conspiracy. Prosecutors alleged that by August 2025, Tricolor had pledged approximately $2.2 billion in collateral to lenders and investors, even though it had only about $1.4 billion in actual collateral.
Chu has pleaded not guilty to an eight-count indictment that includes bank fraud, securities fraud, wire fraud, conspiracy, and operating a continuing financial crimes enterprise.
On Aug. 14, U.S. District Judge Kevin Castel, senior judge for the Southern District of New York, rejected Chu’s request to dismiss the continuing financial crimes charge. If convicted on that count, Chu faces a mandatory minimum sentence of 10 years in prison and potentially life.
Chu’s trial is scheduled for Jan. 25, 2027.
Kollar and Seibold pleaded guilty on Dec. 16, 2025, to criminal fraud charges and agreed to cooperate with prosecutors. Goodgame also pleaded guilty to fraud and conspiracy charges and agreed to cooperate with the government.
“Fraud became an integral component of Tricolor’s business strategy. The resulting billion-dollar collapse harmed banks, investors, employees, and customers,” Manhattan U.S. Attorney Jay Clayton said in a statement.
Tricolor filed for Chapter 7 liquidation on Sept. 10, 2025, in the U.S. Bankruptcy Court for the Northern District of Texas. Eighteen affiliated companies entered bankruptcy, and their cases were jointly administered under Tricolor Holdings’ case. The liquidation remains underway under Chapter 7 trustee Anne Elizabeth Burns.
The SEC said the bankruptcy review of Tricolor’s collateral is ongoing and that the full extent of investor losses has not yet been determined.