Patrick James and Edward James, the founders of auto parts maker First Brands, are facing serious federal charges after being indicted on fraud and conspiracy counts.
Prosecutors say the brothers secretly carried out years of financial schemes that helped drive the company into bankruptcy while allowing them to collect millions of dollars for themselves.
The indictment was unsealed Thursday in federal court in New York. It accuses the brothers of bank fraud, wire fraud, money laundering conspiracy, and related crimes.
According to the filing, Patrick and Edward James used false records and hidden debts to mislead lenders and financing partners from 2018 to 2025.
Prosecutors claim these actions helped First Brands secure billions of dollars it was not entitled to receive.
"These schemes yielded billions of dollars in financing to First Brands and enabled Patrick James and Edward James to reap millions of dollars in proceeds derived from their fraud," the indictment states, Yahoo reported.
First Brands filed for bankruptcy in September 2025. At the time, more than $2 billion in company funds could not be explained, leaving lenders and investors scrambling for answers.
The Justice Department said the company had only $12 million in cash left but more than $9 billion in liabilities. Patrick James resigned shortly after the bankruptcy filing.
FBI New York, @IRS_CI Washington, D.C. Field Office, @HSIDetroit, and @SDNYnews, announced today that two former executives of First Brands Group, LLC, Patrick James and Edward James, were charged with conspiracy to commit wire fraud and bank fraud, conspiracy to commit money… pic.twitter.com/drYYQln7Pd
— FBI New York (@NewYorkFBI) January 29, 2026
First Brands Vows Legal Action
Prosecutors allege the brothers inflated invoices tied to accounts receivable and payable, created false financial statements, and hid major liabilities from lenders.
These steps, they say, made the company appear healthier than it truly was. The indictment claims their actions badly damaged First Brands' finances and directly led to its collapse.
A spokesperson for First Brands said the company plans to pursue all legal options against the brothers and that its board has started an independent review of past business practices.
"This is a tragic situation that has disrupted the lives of employees, families, and communities who depend on this business," the spokesperson said. "We recognize the very real human toll of these events."
According to CBS News, Edward James' attorney, Seth DuCharme, strongly pushed back on the charges. He said his client has "conducted himself with integrity and dignity over decades of hard work," adding that the government has not shown evidence to support the accusations.
Patrick James founded First Brands in 2013 and quickly expanded the Cleveland-based company into a major name in automotive parts.
The business sells products like brakes, spark plugs, and windshield wiper blades. Edward James served as a senior executive, according to the Justice Department.
Originally published on vcpost.com
