A Tricolor dealership in Houston in 2025. (Mark Felix/Bloomberg)
key takeaways:
- David Goodgame, the former chief operating officer of Tricolor Holdings, pleaded guilty to fraud charges in New York federal court on June 24.
- Banks including JPMorgan Chase, Barclays and Fifth Third suffered billions in losses following Tricolor’s bankruptcy and alleged collateral misrepresentations.
- Goodgame said it would cooperate with prosecutors, while founder Daniel Chu faces additional charges and an October 19 trial.
Former Tricolor Holdings Chief Operating Officer David Goodgame pleaded guilty last year to fraud charges stemming from the collapse of the used car dealer and lender.
Goodgame, 49, entered her plea at a hearing in New York federal court on June 24, leaving Tricolor founder Daniel Chu alone to face charges that he committed “systemic fraud” of his banks. Goodgame said he would cooperate with prosecutors and possibly testify against Chu.
“I knew Tricolor was defrauding the banks and committing fraud,” Goodgame told U.S. District Judge Kevin Castell. Goodgame said he was aware that company executives were manipulating data and had raised concerns with Chu.
JPMorgan Chase & Co., Barclays Plc and Fifth Third Bancorp have said they are losing millions of dollars from providing revolving credit lines to Tricolor, which filed for bankruptcy in September after closing more than 60 locations in the U.S. southwest.
Tricolor is one of a number of business failures that have raised questions about whether financial institutions are properly assessing the risk in their loan portfolios. Tricolor’s collapse was preceded by a steep decline in auto parts maker First Brands Corp., which went bankrupt amid allegations of fraud and similar criminal charges.
Prosecutors claim that Tricolor executives acting at Chu’s direction defrauded banks by repeatedly “double pledging” or counting on “almost worthless” assets as collateral for their loans. A month before the bankruptcy, Tricolor reportedly had $1.4 billion in collateral, whereas it had told banks it had $2.2 billion.
Ex-Tricolour chief operating officer David Goodgame pleaded guilty to six counts of fraud and conspiracy. (Bob Van Vorhis/Bloomberg)
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Goodgame pleaded guilty to six fraud and conspiracy counts, the most serious of which carry a maximum sentence of 30 years in prison. Two other former Tricolor executives previously pleaded guilty in the case and are cooperating with federal prosecutors in New York.
Chu, who has pleaded innocent, is scheduled to stand trial on October 19. Prosecutors filed additional charges against Chu on June 24.
The case is US v. Chu, 25-cr-00579, US District Court, Southern District of New York.