Car Loan Frauds! Bosses Forgave Payments, Fooled Investors!

U.S. Securities and Exchange Commission Litigation Release No. 26431, dated December 5, 2025.

The SEC charged James R. Collins and Robert F. DiMeo, former executives of Honor Finance, LLC, with misleading investors about subprime automobile loans. They artificially inflated the value of collateral by including ineligible loans, extending repayment dates without consent, and forgiving payments for delinquent borrowers. A final judgment ordered them to pay disgorgement and interest, deemed satisfied by restitution in a related criminal case.

In Plain English

Imagine you're selling a basket of IOUs (loans) to people. Two executives, James and Robert, were in charge of a company that made these loans. They told investors the basket was full of good IOUs, but they secretly put in some bad ones. They also changed the rules for some borrowers without telling them, making it look like more people were paying back their loans than actually were. This made the basket seem more valuable than it really was, and they sold it for a lot of money. Later, the SEC found out and made them pay back some of the money they made unfairly.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Create a Securitization Trust Honor Finance, LLC, a subprime automobile finance company, created a securitization vehicle called the Honor Automobile Trust Securitization 2016-1 (HATS).
2. Assemble Loan Pool The company began assembling a pool of subprime automobile loans to be included as collateral for HATS. This pool was intended to back a $100 million securities offering.
3. Include Ineligible Loans James R. Collins and Robert F. DiMeo, former executives, were responsible for including loans in the HATS deal that did not meet the eligibility criteria for the securitization vehicle.
4. Manipulate Repayment Dates Collins and DiMeo also extended the repayment dates for some of the included loans without the borrowers' knowledge or consent, making them appear less delinquent.
5. Forgive Payments Furthermore, they engaged in practices of forgiving payments due from delinquent borrowers, further masking the true performance of the loan pool.
6. Artificially Inflate Collateral Value These actions were specifically designed to artificially inflate the value of the collateral underlying HATS, making the loan pool appear healthier and more valuable than it was.
7. Provide False Information to Investors As a result of these improper practices, Honor Finance provided servicing and performance information to investors that was false and misleading at the time of the $100 million securities offering and in subsequent monthly reports.

The Enforcement Action

On December 3, 2025, the SEC obtained a final judgment against James R. Collins and Robert F. DiMeo. The judgment permanently enjoins them from violating antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and permanently prohibits them from serving as officers or directors of public companies. Collins was ordered to pay $450,000 in disgorgement plus $100,332 in prejudgment interest. DiMeo was ordered to pay $162,500 in disgorgement plus $36,231 in prejudgment interest. These amounts are deemed satisfied by a restitution order in a related criminal case (United States v. Collins et al., 20-cr-232) where the court ordered Collins and DiMeo to jointly pay $67,243,790.94 in restitution. Collins was sentenced to 48 months imprisonment, and DiMeo to one day of imprisonment and 12 months supervised release.

Original SEC litigation release ↗ · Browse all cases