Going All Enron On Them
Before subprime auto lender Tricolor imploded, its CEO allegedly proposed one of the dumbest stunts in corporate history
“I know this is going to end bad, but I’m going to pretend it’s going to end good.” – Johnny Knoxville
The game was almost up for Tricolor Holdings, a once-prominent subprime auto lender and used car dealer. After loaning the company hundreds of millions of dollars, lenders suspected the collateral they’d received didn’t exist.
CEO Daniel Chu came up with a daring, but astonishingly stupid plan, according to a fraud indictment against him and other top executives that was unsealed on Tuesday.
Chu planned to flat out tell one of his lenders they were right. And that Tricolor’s books were so bad, it was going to be the next Enron. And wouldn’t they look stupid loaning all that money to the next Enron? How’d they like to explain that one to their bosses and their boards and their shareholders? Huh?
Perhaps it’d be best to keep quiet about all this and negotiate like banksters. Know what I mean?
“Enron obviously has a nice ring to it, right?” Chu laughs as he discusses the plan with his top executives.
“I mean, Enron, Enron raises the blood pressure of the lender … Who wants to be thrown in the category?”
According to the indictment, he’s laughing and laughing during the exchange. “That Enron case is fucking perfect, I think.”
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This is like getting caught burglarizing a house and telling the homeowner it’s all his fault, and that he should be embarassed, for leaving the front door open.
Like a stunt attempted on MTV’s Jackass, it didn’t work out so well.
Tricolor filed for a Chapter 7 Bankruptcy liquidation in September. Its lenders are out hundreds of millions. And prosecutors are now alleging that Chu, former Chief Financial Officer Jerome Kollar and former finance executive Ameryn Seibold duped lenders with $800 million in bogus collateral.
From 2018 through this year, Chu and his co-defendants allegedly double-pledged assets to multiple lenders. They also allegedly manipulated the value of assets, which included used car inventories and auto loans they had made with rates as high as 17%. In some cases they allegedly collateralized loans on which they had not received payments for over 90 days.
For his part, Chu walked off with nearly $20 million in salary and bonuses between August 2023 and August 2025. He took his last $6.25 million chunk of that sum just weeks before laying off 1,000 employees and filing bankruptcy, according to the indictment.
He was right about one thing: His lenders, which included JP Morgan Chase, Fifth Third Bank, should be embarrassed for trusting him.
“It is not our finest moment,” said JPMorgan Chase CEO Jamie Dimon in October after the nation’s largest bank charged off $170 million in losses from Tricolor.
And if some of the nation’s largest lenders are this reckless, what’s next? Remember, it was failing subprime auto lenders who presaged the 2008 financial crisis.
Indeed, a slew of financial giants have also been stung by the bankruptcy of Cleveland, Ohio-based First Brands Group, an auto parts conglomerate that landed in bankruptcy court on Sept. 29. Lenders included Jeffries Financial Group, UBS and Blackstone. Then there’s Raistone Capital, a factoring giant that purchased or financed invoices from First Brands and its subsidiaries.
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“I shouldn’t say this, but when you see one cockroach, there’s probably more,” JP Morgan Chase CEO warned in October. “Everyone should be forewarned on this one.”
Roomba finally ran out of roomba
iRobot, maker of Roomba vacuums, got sucked into bankruptcy court this week, a victim of rising tariffs, Chinese competition, a failed merger with Amazon, and of course, its hefty debt.
The plan now is to hand it over to its contract manufacturer in China, Picea, which it owes money. So now we’ll have Chinese robots sweeping our floors and mapping every square inch of our homes as they go. What? Me worry?
Despite the popularity of its product, iRobot has been losing money for years. Substack’s Herb Greenberg put one of his trademark “red flag alerts” over iRobot as far back as January 2024:
“We’ve seen this before, as individual investors flock to the bludgeoned stocks of companies they know and maybe even use, like George Foreman Enterprises, Tupperware or maybe the best example ever, Bed Bath & Beyond.”
Read More: Red Flag Alert: Don’t Get Stucked In … (Herb Greenberg)
Substack’s Matt Stoller this week placed iRobot’s failure into the vortex that is slowly choking us all. Basically his thesis goes like this: China produces, America consumes, and Wall Street likes it that way.
Read More: How Wall Street Ruined the Roomba and Then Blamed Lina Khan
Stoller details how investors stripped iRobot of its innovation to the point where its remaining technology and data is now going to China. Basically, U.S. consumers and the businesses that serve them are all being harvested for a quick buck.
“The business of America right now,” Stoller writes, “is extraction, not creation.”
Another week, another Ponzi
Hardly a week goes by when someone gets busted running one of the oldest scams in the book.
This week it was David Bradford, 53, the former chief operating officer of Georgia-based Drive Planning. He pleaded guilty on Wednesday to conspiracy to commit wire fraud in a multi-year Ponzi scheme that defrauded investors out of more than $4 million.
Prosecutors said Bradford and others marketed fictitious returns and misrepresented fund structures. And of course they allegedly used new investor money to pay earlier investors and for personal expenditures. Bradford of Peachtree Corners, Ga. is slated for sentencing in March.
Meanwhile, Drive Planning’s founder Atlanta financial guru Russell Todd Burkhalter is alleged to have run a much bigger Ponzi. The Securities and Exchange Commission accused him of running a $300 million Ponzi in August.
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Burkhalter’s lawyers have denied the civil allegations and say their client is cooperating with the SEC. He has not been criminally charged.
Burkhalter’s LinkedIn profile listed him as chairman of a “Christian Music Ministry” and a member of the guest services team at North Point Community Church, a prosperity gospel megachurch in Alpharetta, Ga., whose former pastor once wrote a book titled, “How to Be Rich.”
The SEC alleges Burkhalter encouraged investors to tap their savings, retirement accounts and lines of credit, and promised to deliver 10% interest every three months.
Burkhalter then bought a $3.1 million yacht, which he named, “Live More,” and a $2 million condo in Cabo San Lucas, Mexico. He also spent $4.6 million on private jet rides and luxury car services.
His big prize was a 250-acre cattle ranch in Mineral Bluff, Ga., that he bought for more than $22 million.
It was to be leased for events. “The American ideas of God, country and prosperity,” was how the property was described on a website.
Praise the Lord and pass the Ponzi.
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