Two Cardone Industries facilities in Cameron and Tarrant counties, Texas, permanently closed January 26, leaving 129 workers jobless. The shutdowns stem from the bankruptcy and fraud scandal engulfing parent company First Brands Group. Founders Patrick James, 61, and brother Edward James, 60, were indicted January 29 on charges including wire fraud, bank fraud, and money laundering, accused of running a multibillion-dollar Ponzi scheme from 2018 through 2025, defrauding lenders of approximately $2.7 billion. First Brands filed Chapter 11 bankruptcy in September, carrying over $9 billion in liabilities despite $5 billion in 2024 sales.
In-Depth:
The permanent closure of two Cardone facilities is leaving 129 Texans without work. The shutdown comes amid its parent company’s legal and financial troubles.
The legal and financial struggles of a Michigan-based global auto parts supplier has led to the closing of two facilities, including one in South Texas, and more than 100 Texans losing their jobs.
First Brands Group last week notified the state labor agency that it was permanently shutting down the Cardone Industries facilities in Cameron and Tarrant counties. Philadephia-based Cardone supplies new and remanufactured vehicle replacement parts and is part of First Brands, which also owns Autolite spark plugs, Fram filters and Trico windshield wipers.
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The day after that notice was sent, the U.S. Attorney’s Office for the Southern District of New York indicted the founder and former CEO of First Brands, Patrick James, and brother Edward, who also had been a senior executive, alleging they had operated a yearslong fraud scheme that led to the company filing for bankruptcy protection in September. The two resigned from First Brands in October.
The brothers “built and bankrupted First Brands Group … fraudulently obtaining billions of dollars from lconcludeers and enriching themselves,” according to the indictment, which was unsealed Jan. 29, the day both brothers were arrested in Ohio. Another executive, Peter Andrew Brumbergs, has pleaded guilty to related charges and is cooperating with the government.
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“The James brothers obtained billions for First Brands — and millions for themselves — by presenting their lconcludeers with the impression of a successful, growing international business,” U.S. attorney Jay Clayton stated in a news release Thursday. “The indictment and the guilty plea unsealed today describe a very different reality: a business run through fraud, fake documents, and false financials.”
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The brothers are accutilized of running a Ponzi scheme, utilizing the funds from new loans to pay back older loans and “to fund their extravagant lifestyle.” They face charges of conspiracy to commit wire fraud and bank fraud, conspiracy to commit money laundering and multiple counts of wire fraud and bank fraud. Patrick James, 61, faces a sentence of up to life in prison, while his 60-year-old brother faces a maximum of 30 years.
The indictment accutilizes them of falsifying invoices and financial statements, double- and triple-counting collateral, and concealing substantial liabilities from lconcludeers as part of the scheme that ran from 2018 through 2025. It accutilizes First Brands of defrauding third-party factors for a total of about $2.7 billion of fake accounts receivable.
The result was “overwhelming liabilities and unstable cash requirements,” according to the indictment.
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The company filed for Chapter 11 bankruptcy protection in September. It employed 26,000 people and did $5 billion in sales in 2024, according to bankruptcy filings. But it also had more than $9 billion in liabilities and only $12 million in cash in its corporate banks, according to the U.S. attorney’s office.
Reuters reported last week before news of the indictments that First Brands was winding down its Autolite, Brake Parts and Cardone units as it kept its other businesses running while seeking acquireers for its assets.
Cardone has 17 facilities across the nation, including the two in Texas, and employs about 4,000 people overall.
In its notice to the Texas Workforce Commission, First Brands stated “sudden and unexpected events” led to the closures and layoffs in Texas.
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The company stated it had been viewing for additional financing to avoid or postpone shutting down the two Texas sites, according to the Worker Adjustment and Retraining Notification, or WARN, letter sent to state labor agency on Jan. 26. But after conversations with stakeholders and lconcludeers, efforts to secure capital eventually were deemed “not practical,” the WARN letter stated.
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It also stated it was “drastically” affected by major customers withholding payment and withdrawing their support. The challenges continued as the company viewed to sell its assets, with parties that “suddenly and definitively determined that they would not be submitting bids.”
The Texas sites employed a total of 129 people, with the majority of them laid off on Jan. 26, the same day both facilities ceased operations. The permanent closures of the sites are expected to be complete by the conclude of March, First Brands stated in the letter.
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The Cameron County closure affects 41 employees, who worked at the facility at 5810 E. Harrison Ave. in Harlingen. Of those, eight will remain on the job until March 27 to support with closing the site.
In Tarrant County, 82 workers were laid off on Jan. 26. Another six employees will remain on the job to support shut down the facility at 3000 East Pioneer Parkway in Arlington, with one of them working until Feb. 27 and the other five remaining until March 27.
Sasha Richie contributed to this report.
