[Stay on top of transportation news: .]
Ex‑First Brands CFO Pleads Guilty in Fraud Case
Prosecutors Say Stephen Graham Will Testify Against Company Founder Patrick James and His Brother Edward
Key Takeaways:
- Former First Brands CFO Stephen Graham pleaded guilty in federal court to fraud and conspiracy charges tied to a scheme that ran from 2018 to 2025.
- Prosecutors say the fraud caused billions in losses by deceiving lenders with falsified financial statements and inflated invoices as the company struggled under more than $10 billion in debt.
- Graham and another former executive are cooperating, and Graham is expected to testify at the July 13 trial of Patrick and Edward James, who deny wrongdoing.
Former First Brands Group Chief Financial Officer Stephen Graham pleaded guilty over a massive fraud that drove the auto parts supply firm into bankruptcy, and he will testify against company founder Patrick James and his brother Edward at their criminal trial.
Graham, 68, entered his plea March 2 before U.S. District Judge Analisa Torres to four counts, including bank fraud, wire fraud, and conspiracy to commit those crimes between 2018 and 2025. He became the second high-level executive to plead guilty, and he could give jurors a road map into a fraud that caused billions of dollars in losses.
“Mr. Graham is expected to testify at a trial that your Honor has set for July 13 against Edward and Patrick James,” Assistant U.S. Attorney Marguerite Colson told the judge, according to a transcript of the hearing.
RELATED: First Brands to Sell Units That Produce Parts for Ford
The collapse last year of First Brands has rippled across Wall Street, as Jefferies Financial Group's Point Bonita Capital, Raistone Capital, Evolution Capital Partners and other firms had invested in receivables at the company. Prosecutors havechargedPatrick and Edward James with orchestrating a scheme to falsify documents and inflate invoices to deceive investors.
First Brands has attempted to restructure in Chapter 11 but has struggled with more than $10 billion in debt and the challenges stemming from the alleged fraud. The company has proposed selling its remaining auto parts factories and has been inmediationwith creditors to avert a liquidation.
Graham served as CFO from 2014 until he resigned Oct. 22. He admitted to a criminal charging document that said he made “a series of false statements to First Brands Group’s lenders and financiers regarding its financial condition and the existence, nature and value of collateral that First Brands pledged or sold to its lenders and financiers.”
Image
Patrick James. (Michael Nagle/Bloomberg)
The Jameses havepleaded not guiltyand deny wrongdoing.
“Patrick James is presumed innocent and unequivocally denies all allegations and charges against him,” his spokesperson said March 5. “He built First Brands from nothing into a global industry leader and has always been devoted to the success of the company. Mr. James looks forward to presenting his case in court.”
Lawyers for Graham and Edward James didn’t immediately respond to requests for comment.
Graham faces as many as 30 years in prison on each of four counts he admitted. He is expected to seek leniency at sentencing for his cooperation.
“I knew that the financial statements issued to First Brands’ lenders contained false and misleading information,” Graham said in pleading guilty, according to the transcript. “I also participated in lender presentations where I presented the false and inflated financial statements to First Brands’ lenders to obtain financing for First Brands on better terms than the banks would otherwise offer. I knew this was wrong.”
Image
Edward James. (Adam Gray/Bloomberg)
Graham said he worked with others to concoct the phony financial results. Colson said that the evidence against Graham includes the testimony of co-conspirators and creditors, false financial statements and written communications from those involved, according to the transcript. He signed a cooperation agreement Feb. 25.
First Brands executive, Peter Andrew Brumbergs, a former senior vice president of finance, has alsoܾٲ and is cooperating with prosecutors.
Prosecutors have said they will prove the case against Patrick and Edward James through documents, text messages, consensual recordings made by multiple witnesses, and testimony by insiders who said the brothers directed them to engage in fraud.
The case is U.S. v. Brumbergs, 26-cr-25, U.S. District Court, Southern District of New York (Manhattan).
