Tricolor executives charged with fraud following collapse
by Chris Benson · UPIDec. 17 (UPI) -- U.S. prosecutors accused Tricolor Holdings executives of running a yearslong fraud scheme that rocked the banking industry earlier this year.
An indictment unsealed Wednesday by the U.S. Attorney's Office in Manhattan accused CEO Daniel Chu, COO Daniel Goodgame and former Tricolor executives Jerome Kollar and Ameryn Seibold of conspiracy, bank fraud and operating an ongoing criminal financial scheme.
"CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor," according to U.S. Attorney Jay Clayton.
Tricolor, a used-car seller catering to buyers with weak credit in the South and Southwest, claimed over $1 billion in assets when it filed for bankruptcy in September.
Prosecutors alleged the company deceived lenders by pledging the same auto loans multiple times and falsifying data to make bad loans appear qualified for financing.
"At his direction, Tricolor repeatedly lied to banks and other credit providers, including by falsifying auto-loan data and 'double pledging' collateral. Fraud became an integral component of Tricolor's business strategy," Clayton said in a statement.
JPMorgan and Jefferies Financial Group had lent hundreds of millions to Tricolor and First Brands before both collapsed in the same month, which raised Wall Street fears about mounting risks in lending.
Clayton said the resulting "billion-dollar collapse harmed banks, investors, employees and customers."
"When you see one cockroach, there are probably more," JPMorgan CEO Jamie Dimon said in a call. "Everyone should be forewarned on this one."
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