First Brands’ new management team has filed a complaint against Patrick James, the company’s founder and former CEO, alleging that he obtained billions of dollars in financing through fraud and embezzled money to enrich himself.
The team’s complaint, submitted on Monday, alleges that James directed First Brands to obtain at least $2.3 billion in accounts receivable financing by using fictitious or nonexistent invoices. Additionally, according to the filing, he double-pledged collateral and obtained additional loans by using special-purpose vehicles.
Patrick James accused of fraud by First Brands
Instead of applying the financing to company operations, James “secretly pilfered some of the company’s assets to fund his and his family’s lavish lifestyle,” the complaint says.
A representative for James pushed back strongly. “Mr. James categorically denies the baseless and speculative allegations contained in the First Brands complaint,” the spokesperson said. “Mr. James has always conducted himself ethically and is committed to doing everything he can to support First Brands’ stakeholders during the restructuring process.” James supported the appointment of a court-appointed fiduciary in the bankruptcy case by filing a motion earlier Monday. His motion stated, “Only an examiner can act with the rigor, focus and independence needed under the present circumstances.”
According to the complaint, hundreds of millions of dollars went straight to James or his affiliates from First Brands between 2018 and 2025. Although James is accused of returning a portion of the funds, the document states, “Mr. James has never provided a comprehensive accounting of the amounts or purposes of all the transfers made between and among First Brands and Mr. James and his affiliated entities.”
Investigators find evidence
According to investigators, James transferred over $100 million from First Brands’ accounts to his own, his companies’, or the Patrick James Trust’s accounts in 2024 alone. It’s safe to say the situation is not looking good for Patrick James.
An independent special committee overseeing the bankruptcy and working with the company’s advisers discovered significant irregularities in First Brands’ use of factoring, a financing method tied to customer invoices. The complaint states that company officials created and submitted some factored invoices for payment even when no real invoices existed, and inflated many others to show customer orders up to ten times larger than they actually were. The filing also alleges that the company factored certain invoices multiple times to raise additional funds.
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