U.S. Files $285.5 Million Tariff Fraud Claim Against First Brands as Debts Reach $11.8 Billion
Updated
Updated · Transport Topics · May 26
U.S. Files $285.5 Million Tariff Fraud Claim Against First Brands as Debts Reach $11.8 Billion
2 articles · Updated · Transport Topics · May 26
$285.5 million in penalties and unpaid duties was added to bankrupt First Brands' creditor stack after the U.S. alleged it underpaid tariffs on brake parts imported from China.
The claim stems from a False Claims Act whistleblower suit filed in March 2022 by Alder Wood and unsealed earlier this year, alleging the company routed imports through its China subsidiary without paying proper levies.
$11.8 billion in total debt already burdens First Brands, while court records show only about $400 million of $2.3 billion in factored receivables appeared legitimate when it filed for bankruptcy in September.
Managers now plan to pursue former insiders, lenders and founder Patrick James to recover money for creditors; James has denied wrongdoing, and a revised plan goes before Judge Christopher Lopez this week.
The tariff case broadens allegations that First Brands' collapse involved fraud across financing, invoices and leadership, after the company abandoned reorganization, cut thousands of jobs and closed dozens of facilities.
Did America's $35 billion auto tariff bill unintentionally fuel a massive corporate crime wave?
If US companies are liable for suppliers' fraud, is a North American supply chain the only safe choice?
With tariff evasion costing $107 billion, can US enforcement defeat sophisticated global fraud networks?