Auto Parts Giant's Leadership Charged in Multi-Billion Dollar Fraud Scheme
The founder and CEO of First Brands Group, a Cleveland-based automotive parts supplier behind household names like Fram and Anco, has been indicted on federal fraud charges alongside his brother, a senior executive at the firm. The case, unfolding in a Manhattan courtroom, alleges a years-long scheme that defrauded lenders of billions of dollars.
An indictment unsealed Thursday details nine counts against Patrick James and Edward James, including charges of operating a continuing financial crimes enterprise, bank fraud, and conspiracy to commit money laundering. The charges carry potential prison sentences measuring in decades if convictions are secured.
Prosecutors allege the brothers orchestrated a sophisticated web of deception to secure financing for First Brands' rapid expansion. According to the court documents, their methods included artificially inflating invoices, repeatedly pledging the same collateral to multiple lenders, fabricating financial statements, and hiding significant company debts. "These schemes were not mere accounting errors," a statement from the U.S. Attorney's Office read, "but a deliberate effort to siphon billions from financial institutions, culminating in personal gain for the defendants and eventual ruin for the company."
First Brands, founded in 2013, grew to become a global powerhouse in brake, filter, and lighting systems, reporting $5 billion in sales last year. Its aggressive growth was fueled by massive loans secured against inventory and physical assets. This strategy, prosecutors contend, left the company perilously dependent on continuous access to capital—a lifeline maintained by fraud. The house of cards collapsed in September 2025 when First Brands filed for Chapter 11 bankruptcy protection. This week, the company began winding down segments of its North American operations while searching for a buyer.
Attorneys for Patrick and Edward James could not be reached for immediate comment Thursday. The case sends shockwaves through the automotive supply sector, a critical but often less-visible segment of the industry now grappling with the fallout.
Voices from the Industry
Michael Rossi, Supply Chain Analyst: "This is a catastrophic failure of corporate governance. First Brands was a tier-one supplier to nearly every major automaker. The alleged fraud doesn't just impact lenders; it destabilizes entire production lines and puts thousands of downstream jobs at risk."
David Chen, Portfolio Manager: "The scale is staggering. It will force a painful reassessment of lending practices and due diligence across industrial manufacturing. Investors and banks will now be digging far deeper into the books of similar leveraged growth stories."
Sarah Gibson, Former First Brands Accountant: "It's disgusting but not surprising. The pressure to hit unrealistic growth targets was immense. This feels like a betrayal of every employee who worked hard to build those brands, only to see it all torn down by greed at the top."
Robert "Bob" Miller, Auto Repair Shop Owner: "Fram and Anco are names we trust on the shelf. To think the guys running the show might have been cooking the books the whole time? It makes you question everything. They better throw the book at them."
This report includes information from Reuters and federal court documents.