Patrick James, the founder of major auto parts supplier First Brands, along with his brother Edward, has been formally charged by U.S. federal prosecutors with orchestrating a sprawling financial fraud that allegedly misled lenders and contributed to the company’s bankruptcy. The indictment, unsealed in Manhattan federal court, accuses the siblings of deceptive practices that secured billions in financing under false pretenses, according to officials.
Federal Indictment Alleges Massive Financial Deception
In the indictment made public this week, Patrick James — who built First Brands into a global supplier of automotive parts — and his brother Edward, a former senior executive, are accused of engaging in a long-running scheme to defraud lenders. The charges include bank fraud, wire fraud, conspiracy to commit money laundering, and operating a continuing financial crimes enterprise. If convicted, both men face potentially decades behind bars.
Prosecutors allege the Jameses obtained billions of dollars in financing by inflating invoices, repeatedly pledging the same assets as collateral, falsifying financial statements and hiding substantial liabilities from creditors. These tactics are said to have misrepresented the financial health of First Brands, enabling the firm to borrow far more than it could sustain.
Company Collapse and Wide-Ranging Impact
First Brands, which reported annual sales of around $5 billion at its peak, filed for Chapter 11 bankruptcy protection in September 2025 with liabilities exceeding $9 billion. The company’s collapse sent shockwaves through the automotive supply chain and raised concerns among major lenders and carmakers alike.
The bankruptcy has affected supply contracts with major automakers such as Ford and General Motors, prompting court-approved short-term financing from those companies to maintain critical operations while assets are sold. First Brands’ restructuring efforts have also involved winding down several divisions that employed thousands of workers across North America.
Defendants Deny Charges, Case Develops
Representatives for Patrick and Edward James issued statements denying any wrongdoing. Patrick James’ spokesperson emphasized his role in growing the company and said he looks forward to contesting the allegations in court. Edward James’ legal counsel similarly defended his record and expressed confidence in his defense.
The case remains active, with federal prosecutors continuing to investigate the breadth of the alleged fraud and seek accountability for the financial losses suffered by lenders and other stakeholders.
