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First Brands Group founder Patrick James and his brother Edward pleaded not guilty to US charges in Manhattan on Wednesday, after prosecutors accused them of fraudulently obtaining billions of dollars from lenders and enriching themselves while the company failed.
The pair made their first public appearance in a New York courthouse for arraignment after being arrested in Ohio last week. Both brothers face eight counts of fraud and conspiracy and Patrick James faces an additional count of managing a continuing financial-crimes enterprise.
Patrick James was First Brands’ founder, chief executive and sole owner, while Edward James held a senior role, overseeing much of the company’s off-balance sheet financing.
At the hearing before a magistrate judge, the first of two scheduled for the brothers on Wednesday, they were allowed to remain on bail in home detention, with Patrick on a $50mn bond and Edward on a $25mn bond.
Prosecutor Nicholas Chiuchiolo said the pair were charged with “extremely serious crimes” as he argued for the detentions.
“There’s no question he [Edward James] will be inconvenienced” by the detention, Chiuchiolo said. However, he added, “we’re not talking about someone who lives in a one-bedroom apartment” since he “lives on a massive compound”.
Chiuchiolo said the government had an “at best . . . an incomplete financial picture” of Edward James’ assets because different figures had been presented, including sums of $40mn and $76mn, but that “in either case these are significant assets” which could “easily be used to flee”. A February 2025 document reported that Edward James had $110mn in assets, Chiuchiolo said.
Lawyers for the brothers had argued home detention was too tough a measure for them. The brothers are US citizens.
In a prepared statement, a spokesperson for Patrick James said: “Mr James did not engage in misconduct and denies the allegations against him. With each day that passes, it becomes more and more clear that the hedge funds and private credit firms are not the real victims as they claim, but rather self-interested, sophisticated institutions that reaped billions of dollars from First Brands through their patently absurd interest rates and fees.
“Mr James reinvested no less than $800mn into First Brands and related entities over the years and there has been nothing showing any wrongdoing related to Mr James taking money out of the business. We look forward to making our case in court.”
First Brands, a car parts business, collapsed into bankruptcy in September, sending shockwaves through US credit markets. The company had raised $12bn in financing.
Prosecutors last week said Peter Andrew Brumbergs, who was a senior finance executive at First Brands, had entered a guilty plea and was co-operating with the government.
Prosecutors alleged First Brands falsely inflated invoices, pledged the same collateral on multiple loans, falsified financial statements and “concealed substantial liabilities from lenders”.
The FT reported in October that prosecutors were investigating the collapse of First Brands.
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