The $9 Billion Lie: First Brands Execs Charged & Raistone Collapses

In the world of asset-based lending, there is a golden rule: Collateral is King. Lenders sleep well at night, believing that if a borrower defaults, the inventory and accounts receivable (AR) are there to cover the loss.

But what happens when the inventory is pledged to three different banks? What happens when the accounts receivable are completely made up?

This week, the Department of Justice unsealed an indictment that answers those questions with terrifying clarity. Patrick James, the former CEO of First Brands Group (parent company of Fram, Autolite, and Trico), and his brother Edward James have been charged with orchestrating a massive, multibillion-dollar fraud scheme.

The fallout has been nuclear. It hasn't just bankrupt an auto parts giant with $9 billion in debt; it has now claimed its first major fintech casualty: Raistone.

The Scheme: "Growth" at Any Cost

According to the Southern District of New York (SDNY), First Brands wasn't just a struggling company; it was a financial mirage.

Prosecutors allege that starting around 2018, the James brothers ran the company like a Ponzi scheme to fuel an aggressive acquisition spree. To buy iconic brands like Fram and Autolite, they needed massive amounts of debt. To get that debt, they needed to show massive assets.

The "Fake Invoice" Factory

The indictment details a brazen operation where executives allegedly:

• Fabricated Invoices: They created fake accounts receivable from customers that didn't exist or for sales that never happened.

• Double-Pledging: They allegedly pledged the same inventory and receivables to multiple lenders simultaneously. Bank A thought they had a first lien on the wiper blades; so did Bank B and Bank C.

• The "Round Trip": To make the fake sales look real, they would allegedly route money through shell companies to "pay" the fake invoices, tricking auditors into thinking cash was flowing.

The motive? The DOJ claims the brothers siphoned millions from the fraud to fund a lifestyle of private jets, luxury homes, and personal chefs, all while the company was rotting from the inside.

The Fintech Casualty: Raistone

While the banks will take a hit, the fraud has been fatal for Raistone, a New York-based supply chain finance fintech.

Raistone’s business model was to connect investors with corporate receivables, essentially letting investors fund a company’s invoices for a return. Unfortunately, First

Brands accounted for roughly 80% of Raistone's revenue.

When First Brands filed for bankruptcy in September 2025, it revealed a "black hole" in its balance sheet. Raistone, which had originated hundreds of millions of dollars in financing based on First Brands' receivables, was left holding the bag.

The End of the Road

Reports confirm that Raistone is now closing its doors after a failed attempt to sell the business to Marblegate Asset Management. The collapse is a brutal lesson in concentration risk. No matter how good your technology is, if 80% of your volume sits with one borrower, and that borrower is a fraud, your platform is doomed.