The founder of First Brands and his brother were indicted on fraud charges Thursday, the latest development in a legal saga involving the beleaguered auto parts company, which filed for bankruptcy in September.

The indictment, unsealed in a federal courthouse in New York on Thursday, accuses Patrick James and Edward James of bankrupting First Brands and fraudulently obtaining billions of dollars behind the backs of the company's lenders and financing partners.

The legal filing alleges that from 2018 to 2025, the brothers enriched themselves by falsely inflating invoices for accounts receivable and payable, falsifying financial statements and hiding substantial liabilities from lenders, among other practices.

"These schemes yielded billions of dollars in financing to First Brands and enabled Patrick James and Edward James to reap millions of dollars in proceeds derived from their fraud," the legal filing claims.

A First Brands spokesperson said the company plans to pursue all available claims and causes of action against the James brothers, and that its board of managers is conducting an independent review of the company's historical business practices.

"This is a tragic situation that has disrupted the lives of employees, families, and communities who depend on this business," the spokesperson said in a statement. "We recognize the very real human toll of these events and the uncertainty many are facing."

$9 billion in liabilities
The James brothers face charges of conspiracy to commit money laundering, bank fraud and wire fraud.

Seth DuCharme, the attorney for Edward James, told CBS News that his client has "conducted himself with integrity and dignity over decades of hard work."

"Today, the government issued a long list of accusations, but has not produced a shred of evidence against him," he added.

The indictment claims the brothers' actions destabilized First Brands finances and were ultimately responsible for the company's demise.

The company filed for bankruptcy in September 2025. At the time, more than $2 billion in funds couldn't be accounted for, leaving investors scrambling.

At the time of its bankruptcy filing, First Brands had $12 million in cash in its corporate bank accounts and over $9 billion in liabilities, according to the Department of Justice. Patrick James resigned from the company in early October.

Patrick James founded First Brands in 2013 and grew it into a dominant automotive parts manufacturer. The Cleveland, Ohio-based company sells brakes, windshield wiper blades and other automotive products. Edward James had served as a senior executive at First Brands, according to the Justice Department.

Part of Patrick James' growth strategy involved acquiring other businesses through borrowed money, which the indictment says created additional financial pressure. Fram filters, Autolite sparkplugs and Anco windshield wiper blades were among the companies First Brands acquired, helping it expand its foothold in the auto industry.

First Brands also used a financial arrangement known as factoring, which involved selling its accounts receivable to retail partners in exchange for near-term cash. The practice left the company exposed to cash-flow disruptions, increased its dependence on external financing, and became a vehicle for fraud, the indictment alleges.

"First Brands factored billions of dollars' worth of customer invoices through arrangements with lenders," the legal filing claims.

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