I don’t have a good photo of First Brands founder Patrick James, mostly because he allegedly doesn’t like to get his photo taken. That’s understandable, but it’s far from the worst thing he’s been accused of doing. A new lawsuit by his former company suggests James pilfered at least $700 million, although the amount unaccounted for is more than $1 billion.
When The Morning Dump talks about billions of dollars, it rarely involves individuals. It’s usually companies, like Ferrari, that saw earnings rise in spite of weaker sales in China and tariffs. Both are weighing heavily on Ford CEO Jim Farley, who explained the difference between the threat of China now and the threat of Japan back in the day.
Bentley is calling its newest car the world’s first “Luxury Urban SUV.” Is that true?
The Patrick James Movie Will Be Interesting
When I was at SEMA a couple of years ago, I was impressed by how many different well-known auto parts companies were suddenly under a single company known as First Brands. Some of these are merely licensing deals (First Brands Group doesn’t own Michelin, but it does make Michelin-branded wiper blades under license), but the company has quickly and quietly collected a ton of companies, including FRAM, Trico, and Raybestos.
Thomas wrote about this in September, but the company had to file for Chapter 11 after it was discovered that the company had giant liabilities that dwarfed the company’s assets. More is coming out, including a lawsuit from the company itself, via Bloomberg, which makes this jaw-dropping claim:
Lawyers for the company — now run by restructuring consultants at Alvarez & Marsal — alleged that James borrowed funds on fraudulent terms, only then to “routinely and regularly” divert cash for himself and his family, according to a Southern District of Texas filing dated Nov. 3. More than $700 million was funneled from First Brands directly to James and his affiliated entities from 2018 to 2025, they claimed.
James “secretly pilfered some of the Company’s assets to fund his and his family’s lavish lifestyle. In short, he lined his pockets at the expense of First Brands and its creditors,” according to the document. The plaintiffs drew on data from more than seven million documents, as well as bank records and a collection of devices from employees.
In the 35-page document, lawyers paint a picture of James’ luxuriant spending habits, pointing to a fleet of at least 17 “exotic cars” and a celebrity personal trainer. In some cases, payments to James and his family were made directly from First Brands accounts, including at least $3 million in rent paid over 2019 to 2024 for a New York townhouse and about $500,000 paid to a private chef in 2025.
That’s a lot, but even $700 million isn’t the total amount that’s unaccounted for in the bankruptcy. First Brand Groups utilized the private credit market to borrow, and allegedly asked for delayed payments from customers, then turned around and used those invoices as a way to borrow more money to buy more companies, and, well, it didn’t work out.
The Wall Street Journal had a big piece on this, and it gets a bit into how the somewhat reclusive James built his empire:
First Brands would often provide products to customers on delayed-payment terms, and then pledge the accounts receivables to outside investors that provided the company with financing. The extent of these arrangements, which wasn’t disclosed until the bankruptcy, grew over time into several billion dollars of off-balance-sheet debt.
Over the years, several business partners sued James over his financing arrangements, alleging misleading and fraudulent practices.
A 2009 lawsuit filed by a creditor alleged that James made representations and omissions that gave a “false understanding of those companies’ financial strength and the value of the collateral securing the loans.” In a court filing, James’s lawyer said “any supposedly fraudulent activities conducted by James, which James denies, were undertaken with the full knowledge and consent of Plaintiff.” James later settled the case, and the terms weren’t disclosed.
The companies are still operating under Chapter 11 rules, so there’s no immediate concern about a run on air filters.
Ferrari Is Still Doing Fine, Thank You Very Much
I mentioned last month that Ferrari has made itself somewhat immune to the whims of the market by rebuilding itself as a luxury and sports brand. The company’s Q3 filings seem to support this, per Reuters:
Luxury sports-car maker Ferrari said on Tuesday its core earnings rose 5% in the third quarter, above expectations, thanks to a strong pricing power supported by models such as the SF90 XX and 12Cilindri, as well as increased personalisations.
The Italian company said its earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 670 million euros ($781 million) in the July-September period, topping an analysts’ consensus of 649 million euros in a Reuters poll.
Must be nice.
Ford CEO Explains The Difference Between China And Japan
Ford CEO Jim Farley sat down with CBS Sunday Morning (link here), and I missed it, but this quote that the Detroit Free Press pulled is interesting:
During the interview, the topic of Japan’s domination of the U.S. auto market in the 1980s came up as a comparison to the threat of China’s EVs coming to the U.S. It’s a topic Farley is not shy to address, but this time he gave a new warning beyond his past comments, characterizing Chinese cars as an “existential threat.”
“They have enough capacity in China with existing factories to serve the entire North America market, put us all out of business,” Farley said on the show. “Japan never had that so this is a completely different level of risk for our industry.”
I think that’s a good point. A mixture of protectionist policies, like the Chicken Tax, and Japan’s lack of a centrally planned economy meant it was never in an immediate position to swamp the United States in the same way.
Behold, The Luxury Urban SUV
Bentley already teased its smaller electric SUV when it showed the rather attractive and pleasingly weird Bentley EXP 15 concept. Now Bentley has come out and announced more details:
Streamed live from the Bentley Motors factory in Crewe, and the future production line of its next all-new car, the world’s first Luxury Urban SUV, Chairman and CEO, Dr. Frank-Steffen Walliser, alongside members of the Bentley board will give a special presentation on Wednesday 5 November at 16:30 GMT. The online briefing, five years to the day of Bentley’s first Beyond100 strategic announcement, promises to include further details of Bentley’s first fully-electrified product along with further strategic updates including a limited production new model coming this year.
Huh.
What I’m Listening To While Writing TMD
Hey, it’s Robert Earl Keen doing “Feelin’ Good Again” live. That’s not a bad way to start the day.
The Big Question
What’s a good example of a Luxury Urban SUV? This feels like a thing that exists.
Top photo:
Good lord I’m so tired of this kind of language. It just reeks of xenophobia and closet racism. It’s a consumer product not an atom bomb. If the things are a threat to the very existence of your company, then maybe you need to build a better product? Maybe if you can’t compete with their costs then stop price gouging people?
And for all the hand-waving that he does when asked about the comparison between China and Japan, this exact same kind of fear-mongering nonsense language was used back in the 70’s and 80’s, too. It may be true that Japan didn’t have the capacity or resources then that China does today, but that doesn’t mean that people weren’t clutching their pearls and stating that the end was near because they saw an Accord.
I just find it hilarious that once a month we have to cart out some domestic automaker CEO and listen to them cry and moan that our very way of life is about to collapse because China figured out how to build a decent mid-size crossover. These companies that love to preach about the free market sure don’t sound like they want a terribly free market.
Based on Farley’s previous comments regarding Chinese vehicles, that’s exactly what he’s saying. He drove a Xiaomi for months and realized that Ford needs to step it up. I didn’t get the impression that he was trying to stir xenophobia.
He is, though. He’s characterizing these cars as some kind of foreign invaders that we need to defend against.
They’re a threat to Ford’s business if Ford doesn’t take them seriously. That’s what he’s saying. Ignore China like they did with Japan back in the day and the domestics may lose more than just market share. The tone I’m getting is Farley wants better product to counter that.
Agreed. Even though Japanese automakers couldn’t out produce domestic automakers, they still nearly won via superior product that has created a reputation Honda/Toyota still benefit from today.
Instead of a superior product, this is equivalent product with a subsidized price tag and the production capacity to supply the world.
America got so worried about Japan that we got Japan to voluntarily limit their exports. Then somewhere along the line we tried to tariff the heck out of their motorcycles.
“America got so worried about Japan that we got Japan to voluntarily limit their exports”
Which backfired spectacularly when Honda and Toyota (and everyone else) set up shop in corn and horse country (no limits on building in-country) and then advertised that we’ve got your American-built cars right here! Come and get ’em, and they couldn’t built them fast enough so Americans were paying over sticker for them (at least Hondas anyway), while Lido was throwing suitcases of cash on his hoods. And lo and behold pretty soon everyone knew someone who worked for a transplant factory or supplier, saw the quality, supported the new local boys and girls and today the only people not building “cars” (i.e. not trucky things) are the Americans while plenty of them are still being built here by most everyone else. And on top of that, an imported Japanese vehicle all of a sudden became perceived as at least a semi-luxury good with some today still looking for or preferring a J-Vin when buying a car.
Yes to this! Also, remember that Japanese brands got creative and increased their margins by introducing luxury brands. So even the brands that continued to import cars still made nice profits.
You think anything produced by the Chinese economic system is anywhere close to “free market?”
Heavily (Chinese) government subsidized vehicles undercutting (US) domestic for the purpose of putting them out of business is an existential threat. No different than Walmart moving into a new town, undercutting all the competition until they go out of business, and then cranking prices above the previous normal.
“undercutting all the competition until they go out of business, and then cranking prices above the previous normal”
That’s called capitalism. We pretend to be all for it, until it reaches a pain point and we finally do something about it. This goes back to the robber barrons of the Gilded Age through to the breakup of AT&T.
We may be on the verge of doing it again with Meta and Google, while Microsoft has over the years (begrudgingly) taken steps to keep the people with the pitchforks at bay.
Those were all internal examples. I’m curious to see how it’s going to play our with an external threat. About the only analog I can think of is Boeing and Airbus, but Boeing has been doing such a good job shooting themselves in the foot, I’m not sure that model is indicative of what might happen in the automobile realm.
Monopolies are an inherent flaw in capitalism, which is why we (the US) allegedly tries to break them up when they harm competition.
The Chinese car manufacturers have the ability act as a monopoly on a global scale due to the extreme production capability.
Ironically, this is exactly why China has significant regulations on Meta and Google in China, so ‘American’ companies cannot monopolize the Chinese market.
US domestic automakers that notably have never accepted government money.
“ listen to them cry and moan that our very way of life is about to collapse because China figured out how to build a decent mid-size crossover”
or because they taught them how to, so the outside of China car makers could have a few good years
> Maybe if you can’t compete with their costs then stop price gouging people?
Why would they do that when it’s so much easier to blame the unions and their “unreasonable” demands?
“The world’s first Luxury Urban SUV” It’s super easy to be the worlds first [thing I just made up].
In that light, I would like to announce myself as the Worlds First™ Sentient Cynomys Author Extraordinaire. I take cash and Venmo.
“Luxury Urban Sports Utility Vehicle”
I too, can string a bunch of words together to create a new market segment.
Coming Soon, the next revolution in automobiles: The “Fancy City Cruiser Fun Car!”
Reminds me of our local zoo, which boasts “the world’s largest bronze gorilla sculpture”! …OK, neat, I guess!
That lawyer statement is awesome. “I didn’t do it, and furthermore, you were in on it!”
Don’t worry First Brands Group, there’s always money in the Fram stand.
It appears First Brands bought a house of cards. Where were the accountants?
FBG was the house of cards. They would buy a successful company, gut/offshore as much as they could to pump up revenue/profit, then use the company as collateral to buy another. Rinse, repeat. Once the results of offshoring caught up with the bottom line, banks don’t get paid and the whole thing comes crashing down.
Contrary to popular belief, offshoring is not simple, easy, or straightforward. Chinese manufacturers will screw you every way possible if you don’t keep them honest.
Patrick James is a herb.
All that tool has managed to do, besides enriching himself, is (somehow) make the aftermarket parts economy even more of an uncompetitive hellscape with increased prices and lower quality.
All those tools have managed to do, besides enriching themselves is (somehow) make the
aftermarket partsUS economy even more of an uncompetitive hellscape with increased prices and lower quality.but enough about the current government!
Obviously the G-Wagon is the luxo box that really best fits the mold.
2nd this, especially with low running boards, oversized wheels, and no sidewall street tires
The Pininfarina designed Laforza has entered the chat.
An urban luxury SUV is a large, plush, 2-box vehicle, taller than a car, with rims real big and leather seats, from a luxury brand. And no off-road intent. Extra points for having been mentioned in a rap song, limo tint, and a really loud sound system.
See: An Escalade.
To the counterpoint, a country luxury SUV is a full size, top trim level SUV from a mass-market brand. See: Eddie Bauer Fords.
I’ve recently moved to a small town in the country, and this was something that I pretty quickly noticed. Even the clearly wealthy individuals drive Chevys and Fords. I assume it is because the nearest import dealership of any kind is an hour away, and we have a Chevy and Ford dealer right in town. Still strange to me to see such a limited variety of vehicles, but it does make sense.
Is there a good example of any SUV?
I nominate the Isuzu Trooper II.
Preach.
I think this site had an article that talked about the 14 brands that rebadged it? Can’t find it, but it is a worthy look in the wikipedia.
A shop near me, https://www.independent4x.com/, still fabricates for them and carries (well, drop ships) them for customers.
I had a neighbour who lifted his Mini Cooper and put on some mud tires, a roof rack basket, and some Hella lamps on the grille – not sure what else he did under the skin.
I quite liked it.
I had wrongly tagged him as someone who’d run stop signs, not signal, and generally not follow speed limits – but he was always the respectful neighbour when on the roads, so he was a good neighbour, too.
Vehicross?
How do you even spend 700 million in that short of a time frame? That seems like it would be difficult to do without raising some red flags along the way.
I would like to accept this challenge. Please give me $700 million, and I will do my level best.
For science.
Based on past history, I predict any Autopian writer would buy 1.4 million $500 cars. Storage? That’s a problem for later.
The Autopian Museum of Holy Grails.
Seeing this and the Polestar article earlier, I find it interesting that we seem to be entering a “build anything but slap SUV on it so it’ll sell” phase because that RR is literally just a large car at this point.
Fram has always made me suspicious. But, I came here to recommend Robert Earl Keen’s Paint the Town Beige. Great song that I can imagine might fit a future Morning Dump Theme!
I’m continuously impressed with Jim Farley – he seems to understand the precarious nature of manufacturing in the US. The automotive industry is one of the few that havent already been overun by larger lower cost competitors. Not sure his alarm bells will actually wake anyone up, but at least he’s trying….
He’s a bit remarkable in the CEO world in that he actually knows how to communicate, and seems interested in doing it.
But when is he going to swap out the awful home grown 10R80 with the ZF unit most of the world uses.
I like that he acknowledges when others do things well, instead of trying to make excuses and justifications to try to drag them down like anything corporate tends to do
Whilst he seems to have loved the Xiaomi SU7, he seems, so far, unsuccessful at replicating a lof of what makes it special.
It makes me question if he’s just happy to just turn a profit doing the same thing over and over by supporting trade barriers, or is he genuinely interested in trying to compete?
Ford’s had a long history before Farley of claiming to change themselves (“One Ford”, or “Quality is Job One”) with little behind the scenes to do that. If the trade barriers continue to go up, what incentive does Ford have to follow through?
Guess we might find out in the coming years. The cheap EV project might be the first indication. I’m sure it would be quite interesting to hear the C level debates in Ford, or any of these companies, over whether to invest minimally and go for maximum short term profits, or really try to innovate. I do personally get the impression that Ford tries to innovate more than most others, but is still a giant corporation beholden to shareholders.
I agree Farley is articulate and pretty smart. But the precarious nature of manufacturing in the US is largely the doing of his and similar corporations, which have relentlessly been outsourcing manufacturing to foreign countries and in so doing completely gutted large swaths of America and entire manufacturing sectors that used to thrive.
Former Trico engineer here, laid off during COVID. The gutting and offshoring of Trico started immediately after the company was bought by FBG. In hindsight, getting fired when I did became a blessing in disguise, I’m much better off now than if I had stayed. We all knew it was a private equity shell game that would explode sooner or later.
Yes, all of us low level peons see all of the shenanigans, but no one really wants to listen to us.
I remember that time I worked for a manufacturer that got into major cash bind and many of our vendors quit shipping us stuff until we paid up. This seriously affected production/deliveries as one can imagine. The out of town Owner came in to hold a ‘rah rah’ meeting with all of us office folk. One of the Purchasing people asked him what was being done about our vendors cutting us off. Owner went ballistic on the guy…’what the hell are you tallking about? You dont know what you’re talking about!’ etc, etc. We are always the ones to see the first cracks. Less than 12 mo. later, delisted from Nasdaq and went into bankruptcy, later taken over by one of those ‘capital management’ companies.
In the ‘there’s no low, too low’ camp, my boss was trying to figure out how to make a new wiper blade initially planned to be 100% us manufactured and assembled, as foreign made/assembled as he could without losing the ‘MADE IN USA’ sticker. Marketing wanted it to be completely domestic for ad purposes, so he ended up using 51% us components, with strictly Mexican contract labor in the US plant. That way he could hit his target profit margin for his bonus.
Same company: Month before ‘year end’, they would have us build the next couple of months worth of product, running massive overtime, and ‘ship’ to an offsite yard (then later brought back to add all the missing stuff to complete the orders), boosting year end sales. Then, the 1st month of new financial year, furlough most of production staff due to lack of work. Rinse, repeat.
Reminds me of “managed earnings” at GE. Shit, we’re short $100m for Q3? Sell a couple buildings in Hong Kong.
Same company also had a warehouse full of ‘junk/damaged/old’ product. Some quarters it was WIP to boost numbers as needed. Eventually, the SEC got involved over inventory ‘irregularities’.
Original owner is still sitting pretty even though company went bankrupt. Evidently, the Chinese division was set up under his son’s name, not main company, so separate. They still import products under this entity 20 yrs later.
“I know this because we have a lot of greedy people in this country and the greediest of the greedy saw what these guys did and went, ‘Wow, that’s really fucking greedy.’
I wish I’d thought of it.
Father and two sons run Adelphia. It’s a cable company. And they take from the company a billion dollars. A billion. Three people. Three people took a billion dollars. A billion. What were they going to do? Start their own space program? Let’s send a monkey to Mars, Dad!!!”
“What were they going to do? Start their own space program? Let’s send a monkey to Mars, Dad!!!”
I have a better idea:
Build a paradigm defining “submarine” out of of nothing but carbon fiber and hubris. Take a dive to the bottom of the ocean. Maybe take some of those other greedy people along for the ride.
It’s a lot quieter than a rocket launch and the fish get fed.
Patrick James is going to be freed and installed in the government as easily as a Fram oil filter is on an engine. He, also like a Fram oil filter, will aid in destroying the very thing he has been installed in. Patrick James is a Fram oil filter.
Now if he could just explain the difference between Ford Quality as Job 1 and Ford Recalls at Number 1
For real! I refuse to buy any modern Ford products. Just insane how poorly they are engineered.
So, at Ford, quality is job 1, but it’s Ford quality, not high quality 🙂
Actually, I love my Maverick, but the recalls do get annoying.
Definitely annoying. I’ve always tended to be a Ford guy. Like their designs and willingness to try new tech….but, it does seem to backfire on them more frequently these days.
Easy. Like all computer systems, Ford is zero based. So quality is job #1, and recalls are job #0.
Steal $100 and the bank owns you. Steal $1 billion and you own the bank. The rich live by different rules than us commoners.
Same as it has been for the history of the world. We actually do a much better job of holding them accountable than in days past. “It’s good to be the King” – at least until you lose your head.
I think the Cadillac Escalade qualifies as a luxury urban SUV.
https://www.cadillac.com/suvs/escalade?srsltid=AfmBOopHl9t7alxdfoRMBvKc_ekfhS9fFntiMoTQLSkme37GsQD5_dpQ
Fram Founder Pilfered Filter Finances from Frugal philanthropists.
In other news, Ferrari phenomenal, Ford fine.
Pfuckin Pfantastic!
Affirmative alliteration assaults Autopian and assuages automotive angst.
If it isn’t the old Flim-flam Fram Man!
Where James screwed up was in not appointing his wife as the new CEO as things started closing in, they can’t prosecute a husband and wife for the same crime
You absolutely can prosecute spouses for the same crime. You may or may not be able to make one spouse testify against the other. “Spousal Privilege” BUT – spousal privilege is FAR from absolute (no privilege in law is), and conspiracy is one of the exceptions to it. If you and your spouse are in a criminal conspiracy together, you are going down together and will probably be forced to testify against each other if needs be. But chances are in as big of a fraud case as this sounds like it is, there will be plenty of evidence such that the prosecution wouldn’t have to do this anyway.
And spousal privilege only applies in criminal cases, not civil cases. This much money gone missing is going to keep a lot of civil lawyers in Porsche payments for years. There is a matrimonial privilege in civil cases, but it’s only for private communications between spouses. You can’t be forced to tell what you spouse said to you in confidence, but you can be forced to testify as to what they did and where they were, for example.
I have the worst effing lawyers
It’s best to just not need a criminal lawyer in the first place. 🙂
The amusing bit about my past is that I was an accounting major in undergrad, and went to law school fully intending to be a tax attorney. Then really liked criminal law and did all my internships on both sides of that field, and basically ignored tax law completely other than a required class. But then fell into IT and never practiced law. Go figure.
Oh, you got hit by the Bob Loblaw Law Bomb!
I like Bob Loblaw’s Law Blog
Why should you go to jail for a crime someone else noticed?
The guy in the Ferrari shirt seems to be saying “I’m glad you’re here, shirt brother” to the guy in the green shirt.
That picture is like alternate universe autopian. Ferrari shirt man is faux-Torch, leftmost man is alt-Matt, and green shirt man is alt-David, grayed by years of child rearing and dealing with Jeeps.
A key variable in spousal privilege is applicable state law. In other words, if you plan to commit a crime or some malfeasance that falls under civil law and want to tell your spouse about it, it pays to study your state’s law before you shoot your mouth off.
Better yet, don’t commit a crime or do something where you can expect to be on the receiving end of a lawsuit.
Oh for sure, like everything in the US, laws vary widely by jurisdiction, but the principles are generally similar. Except in Louisiana – that place is whack (they actually followed the French! Kinda-sorta).
I generally find not being a criminal to be a great way to go through life. Civil lawsuits can result from a difference in opinion, so that is a bit tougher.
100% agree. What can be really frustrating about differences in state civil law is a dispute that would be dismissed in one jurisdiction can be a tort in another. For example, covenants not to compete.
Best yet, don’t tell your spouse about your criminal shenanigans and keep all the money!
Since we’re getting a legal education here, can you explain why a criminal confession (assuming it’s not recorded) isn’t hearsay and inadmissible?
You’re not asking me, but I’ll make a run at your question. In some jurisdictions, a confession made outside of a courtroom is not admissible as evidence in a trial. In other jurisdictions, a confession made outside of court is considered an exception to the no-hearsay rule.
You asked why. A confession is a statement against interest, and is therefore considered reliable, though it may or may not be truthful.
Voluntary false confessions are a reliable plot device for crime novelists, though I have no idea how often they appear in real life. Coerced false confessions, I would imagine, are much more common.
OverlandingSprinter nailed it – and better than I could have at this point. The prohibition against hearsay isn’t absolute either. And like everything, varies between jurisdictions and of course between civil and criminal law. As a general rule, civil law is much more lenient as to what can be considered in the course of a trial, which makes sense since only money is involved, not a person’s freedom.
The law is rarely black and white. Which is why we have so many lawyers, judges, juries, and courts in general. 😉
Yet somewhat ironically judges wear black and white outfits.
In the US, they wear a plain black robe in most cases. What they wear under the robe is largely up to them. Some can be surprisingly casual.
Not true.
I think you may mean that husband and wife can’t be forced to testify against each other in court. But there are exceptions to that as well.
The Feds are currently prosecuting a cousin of mine and her husband for a financial fraud and tax avoidance scheme that they profited off of to the tune of 20+ million bucks.
Before they were caught. Partners in crime, and all that..
Fraud and conspiracy are exceptions to all sorts of privileges.
Patrick James is probably being contacted for a place in Trump’s cabinet right now; trade secrets on the long con.
That Bentley just looks like a liftback sedan. If you told me it was a Genesis, I would believe you.
He’d be wise to donate some of that $700 million for the White House ballroom!
Billionaires gonna Billionaire.
They only get upset when they’re stealing from one another – not when they’re ripping off the 99%.
“good example of a Luxury Urban SUV?”
The first thing AI came up with was Range Rover – which was my first choice as well.
Second would be the Mercedes-Benz G Class – followed by Bentley Bentagaya and Rolls Royce Cullinan.
Agreed on all counts. My first thought was Range Rover as well. Waffling on if an X5 counts as luxury enough. Most certainly a luxury SUV, but it’s too common.
And whatever Maybachs Kanye gives away to random assistants he likes.
Patrick James should have been indicted for this bullshit. Send him to Riker’s Island instead of Club Fed.
‘Club Fed’ type places shouldn’t exist. White collar crimes should go to ICE style facilities.