Executives at Tricolor Holdings, the bankrupt subprime auto lender, were charged on Wednesday over their alleged roles in what US prosecutors described as a years-long, “systematic fraud” scheme.

Daniel Chu, the company’s founder and former CEO, was charged in an indictment unsealed in Manhattan federal court with directing multiple executives since 2018 to defraud investors and lending institutions through multiple schemes.

A defense lawyer did not immediately return a message seeking comment. Tricolor filed for chapter 7 bankruptcy in September, heightening scrutiny of private credit and its influence in the global economy.

“As alleged in the indictment, CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor,” said Jay Clayton, a US attorney, in a statement. “At his direction, Tricolor repeatedly lied to banks and other credit providers, including by falsifying auto-loan data and ‘double pledging’ collateral.

“Fraud became an integral component of Tricolor’s business strategy. The resulting billion-dollar collapse harmed banks, investors, employees and customers.”

The scope of the alleged fraud was revealed this summer, when lenders confronted executives including Chu about Tricolor’s collateral, according to the indictment, which alleges that Chu “concocted plans to conceal or explain away the fraud” in a series of secretly recorded phone calls.

After such efforts failed, Chu extracted over $6m from the company, the indictment said, adding that Tricolor later filed for bankruptcy because it owed over $900m to the company’s largest lenders, the indictment said.

Chu received two payments from Tricolor totaling $6.25m, according to the indictment, which claims that he used some of this money to buy a multimillion-dollar property in Beverly Hills, California.

Associated Press contributed reporting