Mexican and American flags on vehicles at a Tricolor dealership in Houston, Texas, September 11, 2025.
Mark Felix | Bloomberg | Getty Images
The CEO of subprime automobile company Tricolor directed a deputy to wire him $6.25 million in bonuses in August when fraudulent schemes to prop up the company were uncovered, U.S. prosecutors alleged.
Daniel Chu, the CEO and founder of Tricolor, asked Chief Financial Officer Jerome Kollar to send the last two payments of his $15 million annual bonus on Aug. 19 and 20, according to a federal indictment unsealed Wednesday.
Chu, who is accused of committing “systemic fraud” over a period of about seven years ending in 2025, used some of the money to buy a “multimillion-dollar property” in Beverly Hills, California, later that month, the filing said.
Within days of Chu's bonus payments, Tricolor placed more than 1,000 employees on unpaid leave. On September 10, the company filed for bankruptcy protection.
Lawyers representing Chu did not immediately respond to emails seeking comment on the allegations.
Prosecutors say Tricolor created about $800 million in “sham collateral” at Chu's direction by double-pledged the same assets on multiple loans and having employees manually alter records to make delinquent loans appear as collateral, the indictment says.
Tricolor's sudden collapse was one of a series of defaults that rocked the U.S. banking sector this fall and sparked fears about underestimated risks in the American financial system.
Around the time of the bonus payments, Chu allegedly knew that his company was, in his own words, “basically history,” the filing says.
Prosecutors pointed to “secretly recorded” calls in August involving Chu, its CFO and chief operating officer, in which the founder sought ways to keep the company's lenders at bay.
The indictment did not name the banks that Tricolor allegedly defrauded, JPMorgan Chase, Barclays And Fifth Third Bank have disclosed any fees associated with the borrower.
After Tricolor's lenders confronted Chu with questions about the collateral pledged for loans, the CEO presented a lie that some of the manipulated data was related to a Trump administration loan deferment program, the indictment says.
He then considered a different tactic: blaming the banks for ignoring warning signs to reach a settlement and keep his company afloat, prosecutors said.
Chu allegedly compared Tricolor to Enron, the energy company that collapsed in 2001 after the discovery of accounting fraud.
“Enron obviously has a nice ring to it, right?” Chu said, according to the documents. “I mean, Enron, Enron makes the lender's blood pressure go up when they see that.”