NEW YORK (AP) — The founder of Tricolor Holdings Inc. and other executives at the subprime auto loan company were indicted Wednesday in what federal authorities say was a massive fraud that led to the company’s bankruptcy.
The company’s founder and CEO, Daniel Chu, is accused in an indictment unsealed in Manhattan federal court of directing multiple executives to defraud investors and lenders through multiple fraud schemes since 2018.
Defense attorneys did not immediately respond to a message seeking comment.
The scope of the fraud was revealed in late August when lenders confronted Chu and other executives about Tricolor’s collateral, according to the indictment.
The indictment says Zhu and others accused of committing the fraud initially tried to hide the matter, saying the collateral issues were the result of an administrative error.
After those efforts failed, Zhu withdrew more than $6 million from the company, according to the indictment.
Tricolor filed for Chapter 7 bankruptcy on Sept. 10 because it owed the company’s largest lender more than $900 million, according to the indictment.
More information is expected to be released at a morning news conference.
