Mexican and American flags attached to vehicles astatine a Tricolor dealership successful Houston, Texas, US, connected Thursday, Sept. 11, 2025.
Mark Felix | Bloomberg | Getty Images
The CEO of subprime car steadfast Tricolor directed a lawman to nonstop him $6.25 cardinal successful bonuses successful August arsenic fraudulent schemes propping up the institution unraveled, U.S. prosecutors alleged.
Daniel Chu, the CEO and laminitis of Tricolor, told Chief Financial Officer Jerome Kollar to nonstop the last 2 payments of his $15 cardinal yearly bonus connected Aug. 19 and 20, according to a national indictment unsealed connected Wednesday.
Chu, who is accused of engaging successful "systemic fraud" implicit astir 7 years done 2025, utilized immoderate of the wealth to bargain a "multi-million-dollar property" successful Beverly Hills, California, aboriginal that month, according to the filing.
Within days of Chu's bonus payments, Tricolor enactment much than 1,000 employees connected unpaid leaves of absence. By Sept. 10, the institution filed for bankruptcy protection.
Lawyers representing Chu didn't instantly respond to emails requesting remark connected the allegations.
Prosecutors accidental Tricolor created astir $800 cardinal successful "bogus collateral" — astatine Chu's absorption — by double-pledging the aforesaid assets for aggregate loans and by having employees manually change records to marque delinquent loans look eligible arsenic collateral, according to the indictment.
The abrupt illness of Tricolor was 1 of a drawstring of defaults that churned the U.S. banking industry this fall, sparking concerns implicit underappreciated risks successful the American fiscal system.
Around the clip of the bonus payments, Chu allegedly knew his institution was, successful his ain words, "basically history," according to the filing.
Prosecutors cited "secretly recorded" calls successful August that included Chu, his CFO and main operating serviceman wherever the laminitis formed astir for ways to support the company's lenders astatine bay.
While the indictment didn't sanction the banks that Tricolor allegedly defrauded, JPMorgan Chase, Barclays and Fifth Third Bank person disclosed charges tied to the borrower.
After Tricolor's lenders confronted Chu implicit questions astir collateral pledged for loans, the CEO projected a prevarication that immoderate of the manipulated information was tied to a Trump medication indebtedness deferment program, according to the indictment.
He past considered different tactic: Blaming the banks for ignoring reddish flags arsenic a mode to extract a colony and support his institution alive, prosecutors said.
In doing so, Chu allegedly compared Tricolor with Enron, the vigor institution that collapsed successful 2001 aft the find of accounting fraud.
"Enron evidently has a bully ringing to it, right?" Chu said, according to the documents. "I mean, Enron, Enron raises the humor unit of the lender erstwhile they spot that."
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