How the business worked
Tricolor sold used cars and lent the buyers the money to pay for them, often to people with little or no credit history. To fund new loans, it used its existing loans as collateral: banks and bond investors lent against them, and each was told the loans belonged to them alone.
The alleged scheme
According to the SEC, the same loan was often pledged twice — once to a bank credit line and once to investors in asset-backed securities. The SEC also alleges that loan data was changed so that loans which had stopped paying looked current, allowing them to keep being used as collateral.
Prosecutors say roughly $2.2 billion of collateral was pledged, while only about $1.4 billion actually existed.
How it unravelled
- August 2025 — a lender checked for duplicate loans; the CEO called it a system issue.
- 6 September 2025 — more than 1,000 employees were put on unpaid leave.
- 10 September 2025 — Tricolor filed for Chapter 7 bankruptcy.
- December 2025 — criminal charges filed. The former CFO and a finance executive plead guilty.
- June 2026 — the former COO pleads guilty.
- 18 August 2026 — the SEC charged the former CEO, CFO and senior finance director.
This case file is based on SEC and U.S. Department of Justice filings. The former CFO, a former finance executive and the former COO have pleaded guilty. The former CEO has pleaded not guilty and is presumed innocent unless proven guilty. Allegations against him have not been proven in court.