SEC Sues Three Former Tricolor Executives Over Alleged ABS Fraud

The U.S. Securities and Exchange Commission said Tuesday it has filed a civil fraud case against three former Tricolor executives, alleging they misled investors in asset-backed securities tied to the Texas subprime auto lender before its 2025 collapse.

The complaint, filed Aug. 18 in the U.S. District Court for the Southern District of New York, names Daniel Chu, Tricolor’s former chief executive officer; Jerome Kollar, its former chief financial officer; and Ameryn Seibold, its former senior director of finance.

According to the SEC, the three carried out a multi-year scheme that defrauded investors by double-pledging hundreds of millions of dollars of subprime auto loans to multiple asset-backed securities offerings and lenders. The agency said that from at least 2020 through Tricolor’s bankruptcy in September 2025, the company raised more than $1.9 billion through ABS offerings while making false and misleading statements about its financial condition.

The SEC alleges Tricolor told investors that loans in its securitization collateral pools were free of other liens, even though many had already been pledged elsewhere or later would be pledged more than once. The agency also alleges the defendants manipulated loan performance data so that defaulted or nonpaying loans appeared current and therefore eligible to be packaged into securities.

At the time of Tricolor’s bankruptcy, more than $945 million of principal tied to those ABS offerings remained outstanding and payable to investors, the SEC said.

The agency is seeking injunctive relief, disgorgement with prejudgment interest, and civil penalties. It is also seeking 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,” David Woodcock, director of the SEC’s Division of Enforcement, said in a statement.

The civil case adds to a criminal matter already underway in Manhattan federal court. In December 2025, the U.S. Attorney’s Office for the Southern District of New York announced an indictment against Chu and David Goodgame, Tricolor’s former chief operating officer. In that same announcement, the Justice Department said Kollar and Seibold had pleaded guilty on Dec. 16, 2025, and were cooperating. Goodgame is named in the criminal case but not in the SEC’s civil action announced Tuesday.

The Justice Department’s criminal case described a broader alleged collateral shortfall using a different measure from the SEC’s ABS fundraising figure. According to the indictment, by about August 2025 Tricolor had allegedly pledged about $2.2 billion of collateral while holding only about $1.4 billion of real collateral, leaving an alleged $800 million gap. In announcing that case, U.S. Attorney Jay Clayton said, “As alleged in the indictment, CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor.”

The allegations strike at the core of how subprime auto lenders fund themselves. Companies such as Tricolor originate car loans, finance them with short-term warehouse lines, and then bundle the loans into asset-backed securities sold to investors. In that system, the accuracy of loan data and the uniqueness of the collateral are central: lenders and bond buyers need to know the same loan has not been promised to someone else and that the underlying borrowers are actually paying.

Tricolor filed for Chapter 7 bankruptcy on Sept. 10, 2025, deepening the fallout across credit markets. Major banks later disclosed Tricolor-related losses, including JPMorgan at $170 million, Fifth Third at $178 million and Barclays at about $150 million, according to prior reporting.