Corporate Counsel Daily, SEC charges ex-Tricolor execs with fraud in connection with lender’s $1.9B failure, (Aug 19, 2026)
Organizations Mentioned:Tricolor Auto
By Suzanne Cosgrove
Investors lost hundreds of millions of dollars on purchases of asset-backed securities issued by the Texas-based subprime auto lender.
The SEC has charged Daniel Chu, Jerome Kollar and Ameryn Seibold, the former CEO, CFO, and senior director of finance, respectively, of Texas-based Tricolor Holdings, LLC, for their roles in an alleged multiyear scheme to defraud investors by double-pledging hundreds of millions of dollars of subprime auto loans to multiple asset-backed securities (ABS) offerings and lenders (SEC v. Chu, No. 26-cv-7041 (S.D.N.Y. filed Aug. 18, 2026)).
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Chu, Kollar and Seibold with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint also charges Chu with control person liability and all the defendants with aiding and abetting liability.
The complaint seeks injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against all the defendants, as well as officer and director bars against Chu and Kollar.
“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.
Scheme involved SPVs. According to the filing, between at least 2020 and September 2025, Chu, Kollar and Seibold engaged in a scheme that caused investors to lose hundreds of millions of dollars through their purchases of asset-backed securities issued by Texas-based car dealer and subprime auto lender Tricolor Holdings, LLC (Tricolor Holdings), and its affiliates, Tricolor Auto Group, LLC (TAG) and Tricolor Auto Acceptance, LLC (TAA and, collectively with Tricolor Holdings and TAG, Tricolor).
Through a series of special purpose vehicles, Tricolor issued nearly $2 billion of asset-backed securities purportedly collateralized by pools of subprime auto loans (Tricolor Auto Securitization Trusts or TAST ABS Offerings). The defendants’ fraudulent scheme involved misrepresenting auto loan receivables used as collateral to obtain the liquidity necessary to run Tricolor’s operations, meet its debt covenants, and prop up its struggling business.
More than $945 million of principal associated with the ABS offerings remained outstanding and payable to investors at the time of Tricolor’s bankruptcy, the SEC said.
Double-pledged receivables. The defendants’ fraud included the practice of deliberately double-pledging auto loan receivables to multiple TAST ABS Offerings and to separate non-securitized warehouse lending facilities, the filing states.
In offering materials and meetings, Tricolor allegedly stated that the loans included in the ABS collateral pools were free and clear of any other liens when the defendants knew that many had been or would soon be double-pledged.
The complaint further alleges that the defendants deceived underwriters and investors, including by manipulating various loan metrics to make non-paying or defaulted loans appear current and therefore eligible for inclusion in the securitization pools.
Criminal charges filed previously. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Chu, Kollar and Seibold in December 2025, charging Chu with orchestrating the years-long financial crimes enterprise.
The DOJ also charged Chu and David Goodgame, Tricolor’s former COO, with bank fraud and wire fraud offenses in connection with the schemes to fraudulently double-pledge collateral to multiple lenders and manipulate the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements. Both defendants were arrested in December.
“Fraud became an integral component of Tricolor’s business strategy. The resulting billion dollar collapse harmed banks, investors, employees and customers,” said U.S. Attorney Jay Clayton in a statement released at the time.
Attorneys: Abigail Elizabeth Rosen for the SEC.
Companies: Tricolor Auto
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