Autolite spark plugs at an auto parts store in Memphis, Tenn. Autolite is a brand of First Brands. (Houston Cofield/Bloomberg)
February 26, 2026 4:30 PM, EST
Key Takeaways:
- Former First Brands executive Peter Andrew Brumbergs pleaded guilty Jan. 27 to falsifying financial statements, inflating invoices and double‑pledging collateral to secure financing.
- The fraud allegations matter because investors including Jefferies bought about $715 million in receivables that prosecutors say were faked or inflated, according to court filings.
- Brumbergs is cooperating with prosecutors and could testify against founders Patrick and Edward James as the case proceeds in federal court in Manhattan.
A former First Brands Group executive told a judge in January that he falsified financial statements, inflated invoices and double-pledged collateral to help the auto parts supply firm get billions of dollars in financing before its collapse.
Peter Andrew Brumbergs made the statements as part of his Jan. 27 guilty plea to fraud charges, a transcript of which was unsealed Feb. 25. First Brands founder Patrick James and his brother Edward are also facing charges. The James have pleaded not guilty and deny wrongdoing, but Brumbergs, who is cooperating with prosecutors, could be a key witness against them.
The alleged fraud at First Brands has rippled across Wall Street, as Jefferies Financial Group, Raistone Capital, Evolution Capital Partners and other firms had invested in receivables at the company. Jefferies has said its Point Bonita trade-finance fund bought around $715 million in uncollected First Brands invoices, many of which prosecutors now say were faked or inflated.
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Brumbergs, who was a senior vice president of finance at First Brands, didn’t identify his conspirators during his plea hearing. He said he joined others between 2018 to 2025 to provide misleading financial statements.
“We worked to submit quarterly financial statements that included accounting adjustments that misstated First Brands’ financial condition and results,” he said, according to the transcript.
He also said company balance sheets falsified “the nature and existence of inventory and equipment that had been pledged or sold as collateral to other lenders.” He said First Brands failed to disclose to some lenders that collateral had already been pledged to other lenders.
Patrick James, founder and former CEO of First Brands. (Wilfredo Lee/Associated Press)
Between 2020 and 2025, Brumbergs said, he reported false accounts payable levels to supply chain financiers, including banks.
“I knew that some of the supply invoices were false and the financial statements provided to these lenders was not a true representation of the company’s financial condition at that time,” Brumbergs told U.S. District Judge Analisa Torres.
Brumbergs, 45, pleaded guilty to eight counts, including fraud and conspiracy. He faces a maximum of 30 years in prison on each of seven counts but is seeking leniency in exchange for his cooperation.
He said he took “complete responsibility” for his crimes and the harm they caused. “My conduct was my choice, and it was not a mistake of circumstance,” he said.
A representative for Patrick James and a lawyer for Brumbergs didn’t immediately respond to request for comment. A lawyer for Edward James declined to comment.
Assistant U.S. Attorney Peter Davis said the evidence prosecutors have gathered against the James brothers includes testimony from First Brands employees and victims, as well as emails and inflated invoices.
The case is U.S. v. Brumbergs, 26-cr-25, U.S. District Court, Southern District of New York (Manhattan).
