Tricolor Holdings founder Daniel Chu collected nearly $30 million in compensation in the year before the subprime auto lender collapsed amid alleged fraud, according to a lawsuit filed by the trustee overseeing the company’s liquidation.
Chu “defrauded Tricolor by using company funds to pay for lavish personal expenses and forcing the company to pay him tens of millions of dollars in bonuses (in addition to his executive salary),” trustee Anne Burns said in a court filing last week. This compensation “was based on his ability to produce exceptional financial results – results that were the product of the fraud.”
The payments helped finance what the trustee described as an extravagant lifestyle, including luxury homes in Dallas, Beverly Hills and Miami worth a combined $38 million, as well as private jet trips and vacations in Europe.
“Many of the allegations that have been made against Mr. Chu in recent days are inaccurate and seriously flawed, as will become clear when the actual facts are revealed,” Matthew Schwartz, Chu’s attorney, said in a statement. “We look forward to a full and fair hearing in the courtroom.” »
U.S. prosecutors charged Chu and the company’s former chief operating officer last week with running Tricolor through “systemic fraud.” Two other former executives pleaded guilty to fraud.
Read more: Tricolor’s Excel Guy Failed to Correct Alleged Fraud Figures
Chu charged millions of dollars to his American Express business card over the years, the trustee alleged, including for skin conditioning treatments, vitamin infusions and dental work. He also frequented high-end restaurants, including Nobu in New York and Carbone in Dallas, according to the filing.
He continued to use company funds to pay personal expenses even after it was clear to him that the company was in financial difficulty, the trustee alleged. For example, in August 2025, Chu charged $18,000 to his American Express card to pay for his membership in the Core Club, a New York social club, according to the suit.
In emails attached to the suit, Chu told an auditor and board members in 2023 that he was experiencing “undue” stress, when questions were raised about his personal expenses. “So when it comes to my family’s expenses for accompanying me on trips, household expenses like a nanny or IV treatments, that’s kind of my context,” Chu wrote in an email.
“I feel like I used good judgment on these expenses,” Chu said in another email cited in the suit.
Fight against remuneration
Chu has presented the board with compensation increases for years, citing the company’s revenue and sales growth since 2018, the administrator claimed.
In 2022, a consulting firm retained by Tricolor’s board of directors estimated that Chu’s compensation was in line with the average for U.S. private companies. But Chu wanted to be paid on par with the 10th percentile of public companies, even if Tricolor wasn’t one of them.
The board pushed back, according to emails cited in the lawsuit. Chu called the compensation committee process “grossly mismanaged” and called a board member a “big fool” for challenging the pay package, according to filings.
Chu used his role as sole director of Tricolor’s majority shareholder to remove three board members who opposed his compensation demands, the trustee alleged.
Days after the board approved his compensation in February, Chu agreed to buy a ski chalet in Aspen, Colorado, for $25 million, according to the lawsuit. The deal collapsed after Tricolor filed for liquidation, with Chu losing a $1.75 million deposit.
(Updates with details on Core Club in seventh paragraph.)
This story was originally featured on Fortune.com
