Tricolor COO Pleads Guilty, CEO Has Charges Doubled

The federal criminal case surrounding the collapse of Tricolor Holdings took another major turn on June 24 as former Chief Operating Officer David Goodgame pleaded guilty to multiple fraud charges and agreed to cooperate with federal prosecutors, leaving founder and former CEO Daniel Chu as the sole remaining defendant headed to trial.

Appearing in U.S. District Court for the Southern District of New York, Goodgame admitted that he knowingly participated in deceiving the financial institutions that funded Tricolor’s operations.

“I knew that Tricolor was deceiving and defrauding the banks,” Goodgame told the court, adding that he had raised concerns internally with Chu regarding the company’s practices.

Goodgame pleaded guilty to six counts of fraud and conspiracy, including charges carrying potential maximum prison sentences of up to 30 years. Prosecutors confirmed he has agreed to cooperate with the government’s investigation and could become a key witness when Chu stands trial, currently scheduled for October 19.

His plea follows guilty pleas from two other former Tricolor executives, meaning three senior executives are now cooperating with federal prosecutors.

Federal prosecutors allege Tricolor operated a years-long scheme that fraudulently obtained hundreds of millions of dollars in financing from institutional lenders by repeatedly “double pledging” collateral, manipulating loan performance data, and presenting ineligible or near-worthless assets as eligible collateral. According to the government, Tricolor reported approximately $2.2 billion in pledged collateral when internal records showed only about $1.4 billion actually existed, leaving roughly $800 million in inflated collateral.

The company’s largest lenders—including JPMorgan Chase, Barclays, and Fifth Third Bank—have reported hundreds of millions of dollars in losses following Tricolor’s September 2025 Chapter 7 bankruptcy, which shuttered more than 60 retail locations throughout the Southwest.

Superseding Indictment Significantly Expands Charges Against Daniel Chu

The same day Goodgame entered his guilty plea, federal prosecutors filed a sweeping superseding indictment that substantially broadens the criminal allegations against Daniel Chu.

While the original case centered primarily on bank fraud involving warehouse lending facilities, the new indictment alleges Chu personally directed what prosecutors describe as a continuing financial crimes enterprise operating from at least 2018 through Tricolor’s collapse in September 2025.

Among the newly expanded allegations are:

• Continuing Financial Crimes Enterprise, alleging Chu organized and supervised a long-running criminal enterprise involving multiple participants and repeated financial crimes.
• Expanded Bank Fraud and Wire Fraud Charges involving multiple lending facilities and financial institutions over several years.
• Conspiracy to Commit Securities Fraud.
• Securities Fraud, alleging investors in Tricolor asset-backed securities were misled regarding the quality of collateral backing those investments.
• Additional forfeiture allegations seeking proceeds prosecutors contend were obtained through the alleged fraud.

The superseding indictment also includes new factual allegations describing how prosecutors believe the fraud evolved over several years. According to the indictment, executives allegedly manipulated delinquent loan data to make non-performing loans appear current, pledged the same collateral to multiple lenders simultaneously, created fictitious payment records, and falsified borrowing base reports submitted to banks.

Federal prosecutors further allege that after lenders began uncovering discrepancies in the summer of 2025, Chu participated in recorded conversations discussing ways to explain away the inconsistencies, including creating fictitious internal policies and blaming nonexistent system errors rather than acknowledging manipulated collateral reports. The indictment also alleges Chu compared Tricolor’s situation to Enron while discussing potential litigation strategy with executives.

The government additionally claims Chu continued receiving millions of dollars in compensation as the company approached insolvency. Prosecutors allege that after recognizing Tricolor was “definitely insolvent,” Chu directed payment of the remaining installments of a $15 million bonus and ultimately received approximately $6.25 million in payments shortly before the company filed bankruptcy and placed more than 1,000 employees on unpaid leave.

Tricolor, founded in 2007, had grown into one of the nation’s largest used-vehicle retailers focused on subprime financing for Hispanic consumers with limited credit histories. At its peak, the company operated approximately 65 retail centers across Texas, California, Nevada, Arizona, New Mexico, and Illinois, employed more than 1,500 people, and serviced over 60,000 outstanding auto loans before filing Chapter 7 bankruptcy in September 2025.

Chu has pleaded not guilty to the allegations and remains scheduled to stand trial on October 19 in the Southern District of New York.

Case: United States v. Daniel Chu, Case No. 25-cr-579, U.S. District Court for the Southern District of New York.