Three former executives of failed auto dealer and lender Tricolor Holdings LLC are facing fraud charges from the U.S. Securities and Exchange Commission (SEC), which alleges that they engaged in a scheme that duped investors — and doomed their company — by pledging the same sub-prime auto loans to different asset-backed securities vehicles.
The SEC filed a complaint Friday in the Southern District of New York (SDNY) against the Texas-based company’s former CEO, Daniel Chu, CFO Jerome Kollar and Ameryn Seibold, the former senior director of finance, alleging that they engaged in multi-year scheme to defraud investors.
In its complaint, the SEC alleged that from 2020 to September 2025, when Tricolor was forced into bankruptcy, the company raised over US$1.9 billion from offerings of asset-backed securities while misleading investors about the company’s financial health.
Among other things, the regulator alleged that they “double-pledged” auto loan receivables to multiple ABS offerings, and to other lending facilities, and that they included ineligible collateral — such as loans that were already in default — in collateral pools backing the offerings.
“By manipulating the securitized collateral in this way, defendants ensured Tricolor’s ultimate collapse,” the complaint charged.
“[The scheme] obligated Tricolor to pay interest and principal on the same loan multiple times, while Tricolor received, at most, only one payment from its customer,” it said. “Over time, this structure created a hole in Tricolor’s collateral base that grew to approximately US$800 million and spelled certain doom for Tricolor.”
Ultimately, the scheme was uncovered by certain lenders in the summer of 2025, which led to the firm’s bankruptcy. The SEC noted that, as that proceeding remains ongoing, the full scope of investor losses is “currently unknown.”
“We allege that these defendants defrauded investors based on bogus collateral and violated the integrity of our private credit markets,” said David Woodcock, director of the SEC’s division of enforcement, in a release.
The three executives — along with the company’s former COO — were already charged in a parallel criminal case that was filed back in December 2025.
Kollar and Seibold immediately pleaded guilty to fraud charges for their role in the scheme, and are cooperating with the U.S. authorities. The former COO also switched his plea to guilty earlier this year too.
The charges against Chu haven’t been proven, and none of the regulator’s allegations have been proven.
In the SEC’s complaint, it is seeking disgorgement and civil penalties against all three former execs, and officer and director bans against Chu and Kollar.