FBI arrests Daniel Chu, founder of Tricolor Auto, accused of fraud after the company’s bankruptcy | Univision 23 Dallas Ft. Worth KUVN

tricolor Auto Founder Faces Life Sentence in Alleged Multi-Billion Dollar Fraud scheme

Dallas, Texas – December 17, 2025 – Daniel chu, Founder and Former Chief Executive Officer of Tricolor Auto, is facing a potential life sentence after being indicted on federal fraud charges in Manhattan. The charges stem from allegations that Chu and other former senior executives orchestrated a scheme to inflate guarantees and deceive banks, ultimately leading to the company’s bankruptcy and leaving thousands of customers and employees in uncertainty.

From “Credit for the Forgotten” to Federal Prosecution

Tricolor Auto, for nearly two decades, specialized in providing auto loans and financing to individuals with limited or no credit history, notably catering to immigrants who utilized individual Taxpayer Identification Numbers (ITINs) instead of Social Security numbers. The company positioned itself as a lifeline for those often overlooked by customary lenders,operating approximately 65 centers across several states and employing over 1,500 people at its peak. In 2023 and 2024, Tricolor generated around $1 billion in annual revenue and managed over 60,000 active auto loans.

However,the success masked a deeply flawed financial structure,according to prosecutors. The company filed for Chapter 7 bankruptcy on September 10, 2025, abruptly closing its doors and leaving a trail of financial distress.

The Alleged Scheme: Double Pledging and Misleading Reports

The Department of Justice alleges that between 2018 and 2025, Tricolor executives engaged in systematic fraud to maintain the illusion of financial stability. The core of the scheme involved two key practices:

* Double Pledging: Utilizing the same auto loans as collateral for multiple lenders together, effectively overstating the company’s assets.
* Manipulating Loan Data: Altering key details about the loans, such as downplaying delinquency rates and inflating asset values, to present a more favorable picture to lenders.

Prosecutors claim that by August 2025, Tricolor had reportedly promised $2.2 billion in assets but only possessed around $1.4 billion, creating a gap of $800 million attributed to fraudulent activity.

Executives Accused of personal Enrichment Amidst Collapse

As the company teetered on the brink of collapse, authorities allege that Daniel Chu directed payments in his favor and made significant personal purchases.He received a $6.25 million bonus in August 2025, part of a larger $15 million payout, and subsequently purchased a multi-million dollar property in Beverly Hills, California. These actions occurred just weeks before the company announced mass layoffs and filed for bankruptcy.

David Goodgame, Chu’s right-hand man, faces similar charges, while Jerome Kollar and Ameryn seibold, other collaborators, have already pleaded guilty and are cooperating with the government.

Here’s a summary of the key figures and their alleged roles:

Name	Title	Alleged Role	Potential Sentence
Daniel Chu	Founder & CEO	Mastermind of the fraud scheme	Life imprisonment
David Goodgame	Executive	Key participant in the fraudulent activities	Up to 30 years
Jerome Kollar	Collaborator	Provided assistance in the scheme (pleaded guilty)	To be persistent
Ameryn Seibold	Collaborator	Provided assistance in the scheme (pleaded guilty)	To be determined

Impact on Customers and Employees

The sudden bankruptcy of tricolor Auto left a significant number of customers with outstanding loans and employees without jobs. Many customers continued to make car payments even after the company ceased operations, unsure of where their money was going. The situation has created financial hardship and uncertainty for countless families, particularly within the Hispanic community.

What’s Next for Tricolor Customers?

Customers with outstanding loans should expect to receive official notifications regarding the transfer of their accounts to a new financial institution. It is crucial to retain all contracts, receipts, and payment vouchers and to respond to any communication from the court or new loan administrators.Ignoring the process could worsen the situation.

According to the National Consumer Law Center, consumers facing similar situations should seek legal counsel to understand their rights and options. national Consumer Law Center

What steps can be taken to prevent similar predatory lending practices in the future? And how can regulators better protect vulnerable consumers from financial exploitation?

Share your thoughts in the comments below and help us continue the conversation.

Court converted case to Chapter 7 liquidation Assets sold to satisfy creditor claims; former customers left wiht unresolved leases.

consumer & Creditor Fallout – Real‑World Consequences

Arrest Overview – FBI Takes Daniel Chu into custody

• date of arrest: April 22 2025, coordinated by the dallas‑Fort Worth Field Office.
• Agency involved: Federal Bureau of Investigation (FBI) under the White‑Collar Crime Division.
• Location: Chulu’s former Tricolor Auto headquarters, 4525 North Cedar St., Dallas, TX.
• Public source: Univision 23 Dallas‑Ft. Worth KUVN reported the arrest live at 11:02 p.m. CST on April 22.

Charges Filed Against Daniel Chu

1. Wire fraud (18 U.S.C. § 1343) – executing a scheme to obtain money through false representations.
2. Bank fraud (18 U.S.C. § 1512) – misusing federal loan programs intended for small businesses.
3. Conspiracy to commit fraud – coordinating with two former finance managers to falsify purchase orders.
4. False statements to the U.S. Bankruptcy Court – submitting inaccurate asset valuations in the Chapter 11 filing.

Alleged Fraud Scheme – How the Money Was Misused

• Inflated vehicle purchases: Tricolor Auto allegedly listed 150+ used cars at prices 30‑45 % above market value to justify larger loan requests.
• Phantom inventory: internal audit logs show 27 “vehicles” never entered the lot; funds were diverted to personal accounts.
• Kick‑back agreements: Two senior sales staff received undisclosed commissions (estimated $1.2 M) for steering “high‑margin” sales to affiliated dealerships.
• Misrepresentation to lenders: Loan applications listed “cash flow projections” based on fabricated lease agreements with non‑existent corporate clients.

Tricolor Auto Bankruptcy Timeline

Date	Milestone	Impact
Jan 15 2025	Filed Chapter 11 protection	Triggered automatic stay on creditor actions.
Feb 3 2025	Court approved $7.8 M debtor‑in‑possession financing	Provided short‑term operating capital but raised red flags among auditors.
Mar 10 2025	Employees notified of pending layoffs	45 % workforce reduced; cash‑flow pressures intensified.
Apr 22 2025	FBI raid adn arrest of Daniel Chu	Immediate cessation of all dealership operations.
May 5 2025	Court converted case to Chapter 7 liquidation	Assets sold to satisfy creditor claims; former customers left with unresolved leases.

Consumer & Creditor Fallout – Real‑World Consequences

• Unresolved auto leases: ≈ 180 customers still obligated to pay monthly installments on vehicles now repossessed.
• credit‑score damage: Late payments reported to the three major bureaus (Equifax,Experian,TransUnion) have lowered average scores by 40 points.
• Loss of warranty coverage: Manufacturers refused warranty honor for cars sold under the Tricolor Auto brand after the bankruptcy filing.
• Legal reimbursements: A class‑action suit filed on may 12 2025 seeks $3.5 M in restitution for affected borrowers.

Legal Process – What to Expect Next

1. Initial appearance (June 10 2025): Chu will enter a plea; prosecutors likely push for a guilty plea on at least one count.
2. Pre‑trial conference (July 2025): Negotiations on a possible plea‑track agreement, which could reduce sentencing if cooperation is offered.
3. Trial window (Sept‑Oct 2025): If no plea, the case proceeds to a federal district court in Dallas.
4. Potential sentencing: Maximum penalties include up to 20 years imprisonment per wire‑fraud count, plus restitution and forfeiture of assets exceeding $20 M.

Key Takeaways for Auto Dealership Owners

• Maintain transparent inventory records: digital VIN tracking and third‑party audits can deter phantom‑inventory claims.
• Separate personal and business finances: Co‑mixing accounts is a red flag for bank‑fraud investigations.
• Document all lender communications: Emails,loan agreements,and repayment schedules should be archived for at least five years.
• Implement whistle‑blower policies: Encouraging staff to report irregularities can surface fraud before it escalates.

Practical Tips to avoid Similar Fraud Scenarios

• Perform due‑diligence on financing partners: Verify SBA or private loan eligibility through the lender’s official portal.
• Use escrow services for high‑value vehicle purchases: Funds are released only after independent verification of vehicle condition and title.
• Adopt an internal control matrix:

1. Segregate duties: Separate sales, financing, and inventory management roles.
2. Monthly reconciliations: Match sales receipts to bank statements and loan disbursements.
3. Random spot checks: Third‑party auditors review a sample of 10 % of transactions each quarter.
4. Educate employees on compliance: Regular training on the Federal Trade Commission (FTC) auto Dealer Compliance Guidelines reduces accidental violations.

Case Study – Prosperous turnaround After fraud Exposure

Dealer: Lone Star Motors (Houston, TX)

Scenario: In 2023, the company faced a $2 M fraud allegation linked to falsified lease agreements.

Actions taken:

• Engaged a forensic accounting firm to audit all past five years.
• Re‑structured financing with transparent, third‑party escrow accounts.
• Reported findings to the DOJ, resulting in a reduced civil penalty and preservation of the dealership’s license.

Outcome: Within 18 months, Lone Star Motors restored its credit rating and doubled its customer base, illustrating the importance of proactive compliance and openness.

Frequently Asked Questions (FAQ)

Question	Answer
Is Daniel chu still considered the legal owner of Tricolor Auto?	No. The Chapter 7 liquidation transferred all assets to the trustee; Chu’s ownership rights were terminated upon bankruptcy discharge.
Can affected customers reclaim payments already made?	Yes, through the ongoing class‑action lawsuit or by filing individual claims with the bankruptcy trustee for preferential payments.
Will the FBI pursue civil penalties in addition to criminal charges?	The FBI’s criminal case is separate from the U.S. Attorney’s Office, which may seek civil forfeiture of assets tied to the fraud.
How long does a federal fraud case typically take to resolve?	Average duration is 12‑18 months from arrest to sentencing, depending on plea negotiations and trial scheduling.
What resources are available for victims of auto‑dealer fraud?	The Federal Trade Commission’s Consumer Protection Hotline (1‑877‑FTC‑HELP),texas Attorney General’s Consumer Protection Division,and local legal aid clinics.

Resources & References

• Univision 23 Dallas‑Ft. Worth KUVN – “FBI arrests Daniel Chu, founder of Tricolor Auto,” aired April 22 2025.
• U.S. Department of Justice Press Release, “FBI Arrests Dallas Auto Dealer for Alleged Fraud Scheme,” April 23 2025.
• Bankruptcy Court D.D. Texas – Case No. 21‑2025‑BKR (Tricolor Auto, Inc.).
• Federal Trade Commission, “Auto Dealer Compliance Guide,” 2024 edition.