Tricolor Founder Can Tap Insurance for Fraud Defense, Judge Says

Tricolor Holdings founder Daniel Chu, who faces federal fraud charges related to the collapse of the subprime auto-loan firm, won court approval to use company insurance policies to pay for his defense costs, a judge ruled Wednesday.

US Bankruptcy Judge Michelle V. Larson agreed during a Dallas court hearing to free $5 million in so-called directors and officers insurance to pay legal bills for Chu and others, including Tricolor itself, related to federal investigations of the company and its former managers.

Prosecutors in New York have accused Chu of conspiring to defraud lenders and investors through various schemes, including ...