The former chief operating officer at Tricolor Holdings entered guilty pleas on June 24 to six counts of fraud and conspiracy. David Goodgame, 49, admitted before U.S. District Judge Kevin Castel in Manhattan that he knew the subprime auto lender was deceiving its banks.
“I knew that Tricolor was deceiving and defrauding the banks,” Goodgame told the court, according to Bloomberg reporting. He agreed to cooperate with prosecutors and may testify against founder and former CEO Daniel Chu. Goodgame remains free on bail.
Tricolor specialized in loans to lower-income Hispanic communities across the U.S. Southwest. It operated used-car dealerships under names including Tricolor Auto, Ganas, and Ganas Ye. The company filed for Chapter 7 liquidation on September 10, 2025, after lenders cut off funding.
Prosecutors from the Southern District of New York described a years-long scheme running from 2018 into 2025. Executives at Chu’s direction allegedly double-pledged the same vehicle loans as collateral to multiple banks and fabricated data to make ineligible or worthless assets appear eligible. By August 2025, Tricolor had reported roughly $2.2 billion in collateral to lenders while holding only about $1.4 billion in real assets, prosecutors alleged in the original indictment.
Goodgame’s plea covers bank fraud, wire fraud, securities fraud, conspiracy, and false statements. The most serious charges carry maximum sentences of 30 years. Two other former executives, CFO Jerome Kollar and finance executive Ameryn Seibold, pleaded guilty in December 2025 and are cooperating.
Chu now faces an expanded eight-count indictment that adds securities fraud and a continuing financial crimes enterprise charge.
His trial is set for October 19. Chu’s lawyer, Matthew Schwartz, said in a statement to Reuters that Chu is innocent and created a business that helped thousands of Americans buy vehicles as a step toward financial independence. Chu’s team will contest the case at trial.
The collapse left major banks with substantial exposure. JPMorgan Chase, Barclays, and Fifth Third Bancorp reported nine-figure losses from warehouse lines of credit extended to Tricolor. In June, a federal judge dismissed a separate investor lawsuit accusing those banks of missing red flags in the debt they marketed.
Tricolor’s fall came amid broader questions about private credit and warehouse lending practices. The bankruptcy coincided with the collapse of auto parts supplier First Brands, also tied to fraud allegations and criminal charges. Lenders across the sector have since reviewed portfolios for similar collateral issues, with some confirming no double-pledging in their own facilities.
Goodgame raised concerns internally with Chu about data manipulation, according to court statements reported by Bloomberg. Those warnings went unheeded as the fraud continued. Recorded calls captured Chu and others discussing ways to blame banks or auditors when discrepancies surfaced, including references to the Enron case as potential leverage in negotiations.
As the end neared, Chu directed payments to himself totaling $6.25 million from a $15 million bonus, even after privately noting the company was insolvent. The funds helped purchase property in Beverly Hills. More than 1,000 employees were placed on unpaid leave before the bankruptcy filing.
The case highlights risks in subprime auto finance when data integrity and collateral controls weaken. Banks extended hundreds of millions based on misrepresented assets. Investors in related securities saw values drop sharply. The criminal proceedings continue with Chu’s trial approaching and Goodgame positioned as a cooperating witness.
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