SEC Sues Former Executives of Collapsed Auto Lender Tricolor

On August 18, the U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against former CEO Daniel Chu and two other high-ranking executives of defunct auto lender Tricolor. The lawsuit, filed in the Southern District of New York, alleges that Chu, Jerome Kollar, and Ameryn Seibold defrauded investors. Tricolor filed for Chapter 7 bankruptcy in September 2023 after Fifth Third Bank raised concerns over alleged fraudulent activities within the company.

The SEC contends that Chu, Kollar, and Seibold engaged in a fraudulent scheme from at least 2020 to September 2025. This scheme involved misrepresentations regarding auto loan receivables used as collateral to secure liquidity required for Tricolor's operations, fulfill debt covenants, and stabilize the business. As a result, investors suffered losses of hundreds of millions of dollars due to their investments in asset-backed securities.

Earlier this month, a federal judge denied Daniel Chu's request to dismiss a single charge in a criminal indictment accusing him of systematic fraud leading to Tricolor's downfall. Chu has pleaded not guilty to all charges, including bank fraud, securities fraud, wire fraud, and conspiracy, and a trial is set for January 2027.