Layoffs Hit 1,000 Workers Weeks After CEO Pocketed $6.25M

A subprime car lender's chief executive is accused of pocketing millions of dollars as his company collapsed, leaving more than 1,000 employees unemployed just weeks later.

Tricolor Holdings placed over 1,000 staff on unpaid leave on 6 September 2025. The company filed for Chapter 7 bankruptcy—meaning liquidation, not restructuring—just four days later.

A federal indictment alleges that CEO Daniel Chu, 62, received two payments totaling $6.25 million (£4.68 million) on 19 and 20 August—roughly three weeks before workers were laid off. The indictment was unsealed on Wednesday by the US Attorney's Office for the Southern District of New York, and Chu is presumed innocent unless proven guilty.

CEO Took $6.25M as Company Collapsed

The payments came after Chu had described Tricolor as 'definitely insolvent', according to the indictment. The $6.25 million (£4.68 million) represented the final instalment of a $15 million (£11.22 million) bonus he had instructed the company's chief financial officer to pay him.

He used some of the money to buy a property in Beverly Hills, California, on 27 August—eight days after the first payment.

Over the 24 months from August 2023 through August 2025, Tricolor paid Chu more than $19.3 million (£14.44 million) in salary and bonuses. His annual salary increased from $1 million to $2 million, and he received a $2 million bonus for 2024.

Three Weeks Before Collapse

Just three weeks after the final payment, Tricolor placed workers on unpaid leave. The company filed for bankruptcy four days later.

Pledged Cars to Multiple Lenders

The collapse followed years of alleged systematic fraud, federal prosecutors say. The scheme had two main components: first, Tricolor pledged the same cars and loans to multiple lenders simultaneously—similar to pawning a watch twice. Second, executives falsified records to make it appear customers were making payments when they had actually stopped.

By August 2025, Tricolor had pledged approximately $2.2 billion of collateral to lenders but only had $1.4 billion of real collateral—an $800 million shortfall. The fallout left lenders owed more than $900 million.

Secret recordings obtained by prosecutors captured Chu and co-conspirators devising cover stories when lenders discovered the discrepancies last August. In one call, Chu allegedly proposed blaming loan problems on a fictitious 'Trump administration deferment policy,' which did not exist. In another, he compared the situation to Enron and remarked that the scandal could be 'f***ing perfect' leverage against lenders.

Two other Tricolor executives—chief financial officer Jerome Kollar, 62, and finance director Ameryn Seibold, 31—have pleaded guilty and are cooperating with authorities.

From 1,500 Employees to Bankruptcy

Founded in 2007, Tricolor initially aimed to sell used cars to Hispanic customers with limited or no credit history, according to court documents. The company grew to become the third-largest used car retailer in Texas and California, operating 65 dealerships across six states and employing over 1,500 people at its peak.

Annual revenue hit around $1 billion in both 2023 and 2024. At the time of its bankruptcy filing, more than 60,000 car loans remained outstanding.

Chu also faces charges of conspiracy, bank fraud, and wire fraud. Chief operating officer David Goodgame, 49, was arrested alongside Chu and faces similar charges. Both men were detained on Wednesday—Chu in Miami and Goodgame in Texas.

If convicted of the top charge of continuing a financial crimes enterprise, Chu faces a mandatory minimum sentence of 10 years and a maximum of life imprisonment.