New York — The founder of Tricolor Holdings and other executives of the subprime auto lender were charged Wednesday in what federal authorities say was a widespread fraud that bankrupted the company.
Daniel Chu, the company’s founder and CEO, was accused in an indictment unsealed in Manhattan federal court of directing multiple executives since 2018 to defraud investors and lending institutions through multiple fraudulent schemes.
The defense attorney did not immediately respond to a message seeking comment.
According to the indictment, the scope of the fraud was revealed in late August when lenders confronted Chu and other executives about Tricolor’s guarantees.
The indictment said that Cho and others accused of carrying out the fraud initially tried to cover up the matter, saying the additional cases were due to an administrative error.
After those efforts failed, Chu received more than $6 million from the company, the indictment states.
On September 10, Tricolor filed for Chapter 7 bankruptcy because it owed more than $900 million to the company’s largest lender, the indictment said.
More information is expected to be released at a morning press conference.