First Brands founder and former Chief Executive Officer Patrick James and brother, former Senior Vice President Edward James, have been indicted by the United States Department of Justice.

The indictment accuses the brothers of embarking on fraudulent schemes that misled lenders and financiers while enriching themselves.

Alleged activities included inflating invoices, repeatedly pledging the same collateral to multiple lenders, falsifying financial statements, and concealing significant liabilities.

The indictment charges the brothers with nine criminal counts, including operating a continuing financial crimes enterprise, bank fraud, wire fraud, and conspiracy to commit money laundering.

Former Vice President of Finance Peter Andrew Brumbergs plead guilty to charges.

“As alleged in the indictment, Patrick James, together with his brother, Edward James, perpetrated a staggering fraud at First Brands Group,” said U.S. Attorney Jay Clayton. 

“The James brothers obtained billions for First Brands—and millions for themselves—by presenting their lenders with the impression of a successful, growing international business. The indictment and the guilty plea unsealed today describe a very different reality: a business run through fraud, fake documents, and false financials. Together with our law enforcement partners, we will continue working tirelessly to uncover every aspect of this fraud and vindicate the rights of every victim.”

First Brands Group, LLC, which is in the midst of the sale process for the business and currently operating under U.S. Chapter 11 provisions, issued a statement regarding the indictments:

“The criminal charges relate to alleged historical actions by certain former executives who are no longer with First Brands Group or involved in the management, governance, or day-to-day operations of the Company. While these matters concern past conduct, their impact is being felt now by thousands of people.

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

“The Special Committee of the Board of Managers continues to conduct an independent review of historical business practices, and the Company intends to continue pursuing all available claims and causes of action against Patrick James, Edward James, and others to maximize value for the estate. First Brands Group is fully cooperating with law enforcement and remains focused on advancing its ongoing sale process during this time.”