DOJ Charges First Brands Founder and His Brother With Multibillion-Dollar Fraud

First Brands Executives Charged With Multibillion-Dollar Fraud

United States Attorney for the Southern District of New York, Jay Clayton, United States Attorney for the Northern District of Ohio, David M. Toepfer, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), James C. Barnacle, Jr., Executive Special Agent in Charge of the Internal Revenue Service – Criminal Investigation (“IRS-CI”) Washington, D.C. Field Office, Kareem Carter, and Special Agent in Charge of the Detroit Field Office of Homeland Security Investigations (“HSI”), Jared Murphey, announced today the unsealing of an indictment charging PATRICK JAMES, the founder and former CEO of First Brands Group, LLC (“First Brands”), and his brother EDWARD JAMES, a former senior executive at First Brands […]

As alleged in the indictment, PATRICK JAMES and EDWARD JAMES perpetrated a yearslong fraud at First Brands, eventually bankrupting the global automotive company in September 2025. At the time of its bankruptcy, First Brands—a company that reported approximately $5 billion in net annual sales worldwide—declared just $12 million in cash in its corporate bank accounts and over $9 billion in liabilities. As a consequence of the defendants’ fraudulent schemes, FIRST BRANDS’ lenders and creditors now face billions in losses. […]

Also unsealed today is the guilty plea of PETER ANDREW BRUMBERGS in connection with his role in the scheme. BRUMBERGS pled guilty pursuant to an Information before U.S. District Judge Analisa Torres on January 26, 2026. BRUMBERGS is cooperating with the Government. 

Interpreter Insider Trading

We have a few examples of eavesdropping as a source of information for fraudulent insider trading. This was a heightened problem during the work-at-home era and interacting with family members. The insider trading case against a translator was a new take. The translator in question has a family that is a high level executive of a company that learned of a merger between its US joint venture partner and another company.

Song Yuan worked for a tire company in China. According to the SEC complaint, Yuan was on a call between Yuan’s tire company and Cooper Tire, a US company with publicly traded stock. […]

Yuan’ has a relative that is a high level executive ‘s family member and Cooper’s CEO were on a videoconference with Cooper Tire’s CEO. Yuan acted as the [interpreter]. During the call there was disclosure that Cooper Tire had received an purchase offer from Goodyear.

Yuan went out and purchased a bunch of Cooper Tire stock. It rose in price when the acquisition by Goodyear was announced. Yuan made over $65,000 in profit on the ensuing stock sale.

SEC Charges Bay Area Entrepreneur and His Business Entities in Alleged Multimillion Dollar Ponzi-Like Scheme

On January 29, 2026, the Securities and Exchange Commission charged Milpitas, California resident Satish Appalakutty and his entities, Lorven Funds and Lorven Advisors LLC, alleging that they defrauded at least 100 investors of at least $37 million.

According to the SEC’s complaint, from the beginning of 2019 through March 2024, the defendants orchestrated a Ponzi-like scheme in the San Francisco Bay Area, where Appalakutty met and solicited many of his investors through a Hindu temple he attended. As alleged, the defendants misrepresented to investors that they would use their funds to purchase stocks of well-known public companies at a discount, purchase stocks of private pre-IPO companies, or otherwise invest the money to generate returns for investors, and the defendants falsely promised investors minimum rates of return ranging from 8% to 62.5% annually. In reality, however, the SEC’s complaint alleges that the purported investment opportunities were fictitious, and the defendants did not purchase any stocks of public or pre-IPO companies or carry out any investment activity on behalf of investors. Instead, Appalakutty allegedly used new investors’ money to make Ponzi-like payments to prior investors, and misappropriated approximately $6.7 million of investor money for his personal benefit, including using approximately $4.4 million for his software startup, Vistalytics Inc.

Adani Hires Top Wall Street Lawyer in Sign SEC Case Will Advance

Gautam Adani has hired a prominent Wall Street lawyer to defend him against fraud allegations by the US Securities and Exchange Commission, as the regulator presses to advance its stalled case. India’s second-richest person recently tapped Robert Giuffra Jr., to be his lawyer in the SEC’s lawsuit, court filings show.

Giuffra, who represents prominent clients in high-stakes financial cases as co-chair of white-shoe law firm Sullivan & Cromwell, is also working on President Donald Trump’s bid to overturn his criminal conviction.

The President Is Not Required to Appoint Officers of the Opposing Party

With the recent resignation of Caroline Crenshaw, there are now two vacancies at the top of the Securities and Exchange Commission. The sticking point in filling these vacancies has been President Trump’s unwillingness to appoint Democrats to run our federal agencies.

However, assuming the constitutionally required advice and consent of the Senate is provided, what is stopping President Trump from appointing two more Republicans to the SEC?

In our opinion, the Supreme Court would support the President’s decision to ignore the statutorily required “partisan balance requirement” found in the Securities Exchange Act of 1934. This statutory provision requires that not more than “three of such commissioners shall be members of the same political party.” Such a provision is found in many of the statutes that authorize the existence of “independent” agencies.