The defense team for Daniel Chu, the former Tricolor CEO facing charges under the “Financial Kingpin” statute, returned to a Manhattan courtroom to urge a federal judge to suppress any evidence that the defense alleges was illegally seized from Chu’s electronic devices and iCloud accounts.

Last week, U.S. District Court Judge P. Kevin Castel heard oral argument on the defense motion. Matthew Schwartz, an attorney for Chu, detailed how government agents seized communications that were privileged, personal, and unrelated to the case. According to Law360’s Stewart Bishop, Schwartz called the search “wholly unconstitutional” and requested an evidentiary hearing at which the government would be required to “produce witnesses to testify how the searches were conducted.”

On September 28, Judge Castel issued an order setting an evidentiary hearing on the defendant’s motion to suppress the electronic evidence beginning on October 7, 2026.

Background

Reports of alleged fraudulent activity at Tricolor began to surface in August 2025. On September 10, the subprime auto loan company filed for Chapter 7 in the Northern District of Texas with $1 billion in debt. A federal grand jury investigation into Tricolor began during that period.

Prosecutors allege that Chu directed co-conspirators to double-pledge the subprime auto lender’s assets. Three other former Tricolor executives have pleaded guilty to fraud and conspiracy charges and are cooperating with federal prosecutors.

In a July 29 conference, Schwartz outlined concerns about the government’s search of the seized devices. Schwartz argued that the government conducted a highly intrusive search that exceeded the scope of court-authorized warrants. He said the government’s responsiveness review included private medical records, communications with his spouse and adult children, and even family photos. Schwartz told the court that “the government’s responsiveness review [of emails] has produced a shocking amount of nonresponsive material” – 44 percent, by his calculation.

Schwartz said he sought information about the methodology used in the search, particularly whether the search terms were too broad or whether a human being was involved in the review, but received little information from the government in response.

During oral argument last week, Assistant United States Attorney Shiva Logarajah conceded that agents made some mistakes in identifying material as responsive to the warrant when it was not. However, Logarajah stated that appropriate quality control was in place and that the government’s process was reasonable under the Fourth Amendment.

Evidentiary Hearing

There is agreement that the government’s review captured thousands of private communications outside the scope of the applicable warrants. In response, prosecutors assured the court it had no intention of using nonresponsive materials at trial and that these errors did not demonstrate the bad faith necessary to support a call for blanket suppression.

As Bishop reported following last week’s oral arguments, Schwartz cautioned that the government cannot simply disregard its obligation to remain within the bounds of the warrant in seeking potentially relevant evidence and questioned whether a properly designed search protocol was in place during the review.

According to the defense, the government adopted an inadequate search that disregarded its constitutional responsibilities to respect the defendant’s Fourth Amendment rights. The evidentiary hearing will allow the court to hear testimony about the search protocols used and determine whether the government’s review was reasonable under the Fourth Amendment.

Judge Castel set aside up to three days next week for testimony on the motion to suppress. He has informed the parties to exchange witness and exhibit lists. The hearing is expected to provide a more detailed account of the tools and methodology used in the government’s review of the seized material, as well as what impact, if any, those methods may have on Chu’s Fourth Amendment claims.

The trial is scheduled to begin on January 25, 2027. Following Judge Castel’s August 14 Opinion and Order, the motion to suppress the electronic evidence is the only outstanding pretrial motion.

The case is United States of America v. Daniel Chu, case number 1:25-cr-00579, in the U.S. District Court for the Southern District of New York.