17 exotic cars, luxury homes: First Brands’ Malaysian-born founder accused of looting $915m
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First Brands' products displayed for sale in Massachusetts, US. Bankruptcy lawyers accuse its founder Patrick James of misappropriating millions, if not billions, of dollars.
PHOTO: REUTERS
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NEW YORK - At first, the sales invoice said US$179.84 (S$235). Later, the bill said US$9,271.25 – 50 times more.
It was one more trick in a series of alleged ruses – from fudged numbers and questionable collateral, to off-balance sheet financing and a company slush fund – at First Brands Group, company advisers now claim.
Directing it all, First Brands’ bankruptcy lawyers alleged on Nov 3, was founder Patrick James.
The Malaysian-born businessman persuaded prominent Wall Street firms to lend vast sums to his auto parts company and then misappropriated millions, if not billions, of that money, their lawsuit claims.
Seventeen “exotic cars”. “Lavish” homes in Malibu and the Hamptons. Six-figure bills for a “celebrity” chef and a personal trainer. Those are just some of the allegations involving Mr James’ supposed big spending lifestyle.
The September collapse of First Brands, a mid-size manufacturer that normally would not draw much attention on Wall Street, has exposed cracks in today’s turbocharged credit market.
But Nov 3’s civil lawsuit, which cited the allegedly doctored invoice and dozens of others like it, adds new layers to the financial drama. It also tells a darker story – one of high living financed by years of outright fraud.
The suit claims Mr James siphoned hundreds of millions of dollars from First Brands, all while the company doctored its accounts and promised the same collateral to different lenders to secure private loans and off-balance sheet financing.
Mr James “misrepresented First Brands’ financial position to secure billions in debt financing”, the suit claims. He then “secretly pilfered some of the company’s assets to fund his and his family’s lavish lifestyle”.
Mr James’ lawyers said in court papers filed on Nov 4 that claims about funds being transferred out of First Brands are not supported by evidence or documented asset tracing and instead, “appear to be based entirely on the unsupported mental leap that, if funds were transferred within the timeframe roughly close to personal expenditures by Mr James, such funds must have been used for that personal expenditure”.
US$500,000 for a private chef
Among the most surprising allegations in the lawsuit is the claim that Mr James directed First Brands to raise funds by selling non-existent or doctored invoices to so-called factoring firms, which provide immediate cash to businesses by purchasing their receivables.
First Brands is also accusing Mr James of commingling corporate and personal accounts and draining more than US$700 million (S$915 million) from the business.
According to Mr James’ lawyers, this allegation lacks accounting and other documentary evidence.
By the time it filed for Chapter 11 on Sept 28, First Brands had just US$12 million in the bank, according to court papers.
Among the allegations in the lawsuit, Mr James was said to have used money from First Brands accounts to pay US$500,000 for a private “celebrity chef” in 2025 and at least US$3 million for rent on a New York City town house. (The name of the chef was not disclosed.)
Mr James is also accused of directing others to submit invoices that were reimbursed by Battery Park Holdings, an entity he owns.
First Brands transferred more than US$10 million to Battery Park between 2018 and 2025 to pay for his and his family’s personal expenses, according to court papers.
Over the years, according to the suit, First Brands made other substantial transfers to entities controlled by Mr James, transactions that occurred “in close proximity to his acquisition of various real estate properties and cars”. It included disbursements from First Brands prior to Mr James purchasing a home in Malibu in 2019 and the Hamptons in August 2021, the lawsuit said.
In addition to the fleet of exotic cars, the suit claims Mr James owns at least seven properties.
Asset freeze
The situation is now so urgent that First Brands advisers have asked a Texas bankruptcy judge to freeze Mr James’ bank accounts.
First Brands’ interim CEO Charles Moore said in a court filing that the company is concerned the Mr James, a resident of Ohio, could flee the US, calling him a “Malaysian national” with “hundreds of millions of dollars at his disposal”.
Federal prosecutors are investigating First Brands, Bloomberg News reported in October.
“Mr James is an American citizen with deep business and financial roots in the United States,” his spokesperson said in the statement on Nov 4. “He also has not been a Malaysian citizen since 1988. The notion that he is a potential flight risk is patently absurd.”
Born in 1964 to a Roman Catholic family of Indian descent, he attended a school administered by the De La Salle Brothers religious order in Petaling Jaya, Selangor.
He subsequently moved to the US to study at The College of Wooster, in the rust belt state of Ohio.
The civil suit indicates that alleged wrongdoing at First Brands was more widespread than previously alleged, and comes days after certain lenders accused the company of “widespread fraud”.
First Brands is next scheduled to appear in Texas bankruptcy court on Nov 6.
Mr James’ lawyers said on Nov 4 that First Brands advisers are attempting to “smear” the company founder in order to obtain an order freezing his assets.
The auto parts supplier’s advisers have provided a one-sided account of the transactions and ignore large sums that Mr James put into the business before it filed Chapter 11, including roughly US$40 million over the summer, his lawyers said. BLOOMBERG
