Patrick James arrives at federal court in New York on Feb. 4. (Michael Nagle/Bloomberg)
February 4, 2026 1:11 PM, EST
First Brands founder Patrick James and his brother Edward pleaded not guilty to fraud charges in New York stemming from the multibillion-dollar collapse of their auto parts supply business.
The James brothers entered pleas Feb. 4 before a federal magistrate judge. Federal prosecutors allege the two former First Brands executives used fake and inflated invoices to persuade lenders to provide billions of dollars in financing to the company.
Both men were arrested in Ohio last week after they were indicted on charges including wire fraud, bank fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering. Patrick James was also charged with managing a continuing financial crimes enterprise.
The brothers made an initial appearance in Cleveland federal court but didn’t enter pleas to the charges.
Patrick James, 61, is free on a $50 million bond secured by properties in Ohio, a home in the Hamptons and $5 million in cash. Edward James, 60, agreed to a $25 million bond that requires him to post $1 million in cash.
Another former First Brands executive, Peter Andrew Brumbergs, pleaded guilty last week to his role in the scheme and is cooperating with prosecutors.
Edward James arrives at federal court in New York on Feb. 4. (Adam Gray/Bloomberg)
In court papers, lawyers for Patrick James have pointed to macroeconomic factors like tariffs as contributing to the firm’s financial troubles. Patrick James has also accused some lenders of engaging in “predatory” practices and charging his company onerous fees that tipped First Brands into Chapter 11.
The indictment followed separate civil lawsuits brought against Patrick and Edward James by First Brands bankruptcy advisers. One lawsuit accuses Patrick James of misappropriating more than $700 million between 2018 and last September, when the company filed Chapter 11. The money helped fund James and his family’s “lavish lifestyle,” according to the lawsuit.
Lawyers for Patrick James moved to dismiss the lawsuit, saying that the founder put at least $600 million back into First Brands before it filed Chapter 11.
The case is US v. James, 26-cr-29, US District Court, Southern District of New York (Manhattan).
