First Brands, the parent company of Champion Laboratories in Albion, is at the center of serious fraud allegations tied to its use of third-party financing for customer invoices. The judge overseeing the company’s bankruptcy case has approved $7 million for an independent investigation into the alleged misconduct. According to court documents, First Brands is accused of selling customer invoices to third-party financial institutions in order to receive payments before customers actually remitted funds. It is further alleged that some invoices may have been sold more than once to multiple buyers — a practice that could constitute major financial fraud.
Bankruptcy filings also reveal accusations from First Brands’ own attorneys, who claim company founder and CEO Patrick James misappropriated “hundreds of millions (if not billions) of dollars” from the company. First Brands has reported more than $10 billion in liabilities as part of the bankruptcy proceedings. Court documents allege that James falsified company invoices to fund the purchase of 17 exotic vehicles, luxury homes in Malibu and the Hamptons, and six-figure expenditures for a celebrity chef and a personal trainer.
The case is being overseen by U.S. Bankruptcy Judge Christopher Lopez of Houston, Texas. While Judge Lopez did not directly appoint an investigator, he instructed the U.S. Department of Justice’s bankruptcy watchdog to select one to lead the independent probe.
The investigation is expected to play a key role in determining how deep the alleged financial misconduct runs and what consequences may follow for those involved.