Road to Ruin: Subprime Lender’s Troubles Include Many Turns

The business plan was supposed to be simple: Tricolor made car loans, then pledged those loans as collateral to banks and investors to fund more lending. Instead, federal authorities say, the fast-growing North Texas subprime auto lender repeatedly pledged the same delinquent loans, disguising them as current to raise money on collateral that wasn’t what lenders had been promised.

By the time the scheme began to crack in August 2025, according to a federal indictment, Tricolor Holdings had pledged about $2.2 billion in collateral while holding only about $1.4 billion in actual assets backing those pledges, an $800 million gap that prosecutors attribute to fraudulent reporting and double-pledged loans.