Founder of First Brands and brother indicted on fraud charges

Federal prosecutors on Thursday indicted Patrick James, the founder of First Brands, and his brother, Edward James, accusing them of an elaborate scheme to deceive lenders at the now-bankrupt auto-parts company, the indictment filed in federal court in Manhattan says. The indictment says the brothers “deliberately concealed massive amounts of debt,” faked invoices and lied to lenders about hidden obligations for years.

Prosecutors say they cycled money through subsidiaries and shell companies they controlled to make the company appear larger, and that one arrangement was described internally as a “round trip.” Prosecutors allege First Brands secretly pledged the same invoices to multiple lenders, creating about $2.7 billion of fake accounts, and that the fraud at the company went as far back as 2018.

First Brands, which owned brands such as Autolite, filed for bankruptcy last fall. The company’s unraveling drew attention because major firms including BlackRock, Jefferies and UBS had provided funding to First Brands. After the bankruptcy, First Brands said Mr. James was ousted over his siphoning of company funds to pay for personal expenses such as a private chef, a personal trainer and an apartment.

Scott Hartman, a lawyer for Patrick James, said his client “is presumed innocent and denies these charges,” and added that Mr.

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