Patrick James, founder and former CEO of First Brands Group, and his brother Edward James, a former executive, were indicted by federal prosecutors in New York on January 29, 2026, facing charges including wire fraud, bank fraud, and conspiracy to commit money laundering. Prosecutors allege the brothers engaged in an eight-year scheme from 2018 to 2025 to defraud lenders out of billions of dollars, leading to over $10 billion in losses for financial institutions and the company's collapse into bankruptcy. Patrick James pleaded not guilty to nine criminal counts, while Edward James pleaded not guilty to eight.
The alleged schemes involved inflating invoices, double and triple pledging collateral, falsifying financial statements, and concealing liabilities from lenders. Prosecutors claim the duo obtained billions for First Brands and millions for themselves by presenting an impression of a successful, growing international business. The indictment states that "round trip" funds, which financiers believed were paying suppliers, were instead used to pay interest on debt, rent, leases, or other operating costs, to inject cash into First Brands when it couldn't meet payment obligations.
First Brands Group filed for Chapter 11 bankruptcy in a Texas court with an estimated $10 billion to $50 billion in debt and over $9 billion in liabilities, with only $12 million in corporate accounts. Lender Onset Financial Inc. is specifically suing First Brands for $2.9 billion in a Texas bankruptcy court, dismissing the lawsuit as without merit. Bank of America and other parties have also sued First Brands and Aequum Capital, seeking judgment that they hold liens on inventory. The company's bankruptcy also disrupted the supply chain for major automakers like Ford and General Motors. First Brands was founded in 2013, had $5 billion in annual sales, and its implosion alarmed Wall Street due to the involvement of major financial services companies like BlackRock, Jefferies, and UBS.
