A former CEO has entered a not guilty plea regarding charges linked to an alleged conspiracy involving $800 million in subprime loans to undocumented immigrants.
Daniel Chu, the ex-CEO of Tricolor Holdings, pleaded not guilty on Tuesday, as indicated by court records. As of December 2022, over 75% of the company’s clients were reportedly Hispanic undocumented immigrants.
Founded in 2007, Tricolor has grown to become one of the largest auto loan providers and used car dealerships in the Southwestern United States, as reported by Reuters on June 24. The company entered liquidation in September 2025 after reportedly suffering substantial losses associated with three lenders.
According to the Financial Times, Tricolor disclosed that 68% of its borrowers had no credit score, while over 50% lacked a driver’s license.
Fifth Third Bank, a regional lender, did not respond to a request for comments. Similarly, JPMorgan Chase, Barclays, and the U.S. Department of Justice chose not to comment on the situation.
Chu, along with former COO David Goodgame, former CFO Jerome Koller, and former finance director Ameline Seibold, are accused of working together to represent that the company had roughly $2.2 billion in collateral, while it apparently only had about $1.4 billion in cash, according to the Justice Department. Kohler and Seibold have already pleaded guilty.
Goodgame admitted to the charges on June 24, and he is expected to assist prosecutors in their case against Chu.
In a secretly recorded conversation in August 2025, Chu expressed concerns about inspections by an inspector general, saying, “if we send in an inspector general and say, put this on a screen, that’s a problem.” Koller reportedly concurred that it would be problematic.
Chu also contemplated accusing the lenders of “ignoring red flags,” the Justice Department noted.
U.S. District Judge Jed Rakoff dismissed lawsuits from investors against JPMorgan Chase, Barclays, and Fifth Third Bank, where they alleged the banks neglected evident warning signs in financing Tricolor.
U.S. Attorney Jay Clayton described Chu as the orchestrator of a comprehensive scheme meant to deceive Tricolor’s creditors. The indictment alleges that under Chu’s direction, Tricolor lied to financial institutions by falsifying auto loan data and “double pledging” collateral.
Chu faces serious charges under the “continuing financial crime enterprises” law, which could lead to a minimum of 10 years in prison, potentially escalating to life imprisonment. This law might apply if four or more individuals conspire to carry out financial crimes resulting in at least $5 million in receipts over two years. It’s noteworthy that this is the first time the statute has been invoked in a decade.
During a hearing on Tuesday, prosecutors mentioned they had access to 10 of the 21 devices that had been seized. Chu’s attorney, Matthew Schwartz, requested a trial postponement, highlighting the extensive nature of the Justice Department’s discovery process.
Schwartz asserted, “Mr. Chu wants to go to trial as soon as possible to clear his name. He is innocent,” but noted the need for adequate preparation time for a solid defense and to conduct necessary investigations.
U.S. District Judge Kevin Castel confirmed an October 2026 trial start date during Tuesday’s hearing and scheduled another public hearing for July 29 to decide if this date should be deferred to February 2027.
