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The founder of First Brands, whose bankruptcy rattled Wall Street, charged in multibillion-dollar fraud

The founder of an auto parts company whose bankruptcy rattled Wall Street and prompted a debate about private credit has been charged with fraud.

Manhattan federal prosecutors on Thursday charged Patrick James and his brother Edward James in a multibillion-dollar fraud scheme that they allege involved years of fake invoices and the double- and even triple-pledging of assets.

Patrick James is the founder and former CEO of auto parts maker First Brands, which filed for Chapter 11 bankruptcy protection in September. Its bankruptcy was followed by the collapse of subprime auto-lender Tricolor Holdings, sparking a broader debate about the health of the credit market that drew in JPMorgan CEO Jamie Dimon.

His brother had been a senior executive at the company.

The two men were charged with wire fraud, bank fraud, and conspiracy, including money laundering conspiracy. Patrick James faces an additional count, stemming from allegations that he ran a continuing financial crimes enterprise. A third former executive, Peter Andrew Brumbergs, has pleaded guilty in the case.

Prosecutors said the men inflated invoices, repeatedly pledged the same assets as collateral for loans, and falsified corporate financial statements in a series of schemes that yielded billions of dollars in financing.

A spokesperson for Patrick James said he denies the charges.

“He built First Brands from nothing,” the spokesperson said, adding, “Mr. James looks forward to presenting his case in court.”

Edward James’s lawyer issued a statement blasting his client’s arrest in Ohio as “needless theater.”

“We look forward to appearing in New York on his behalf, and we have complete confidence in Mr. James,” the lawyer, Seth DuCharme, said.

Jefferies and UBS are among the financial firms that have acknowledged exposure to First Brands.

“The James brothers obtained billions for First Brands — and millions for themselves — by presenting their lenders with the impression of a successful, growing international business,” Manhattan US Attorney Jay Clayton said in a statement.




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‘High School Musical’ at 20: How Kenny Ortega made a musical on a shoestring budget — and turned it into a multibillion-dollar franchise

Do you remember what you were doing on this day 20 years ago? If you were an avid Disney Channel viewer, chances are, the answer is living and breathing “High School Musical.”

In January 2006, a direct-to-TV movie musical starring a cast of largely unknown teenagers set a single-night audience record on the Disney Channel. It was such a hit that the house of mouse promptly doubled down with repeat screenings, sing-along versions, piles of merchandise, and a live concert tour that packed arenas across the country. By the time the year was out, the soundtrack had become the top-selling album of 2006.

No one could have known that a Disney Channel Original Movie would eventually become a hit trilogy and multibillion-dollar franchise, but director Kenny Ortega was never in the business of half-heartedness. He’d already made a name for himself as a choreographer (“Dirty Dancing,” “Ferris Bueller’s Day Off,” Madonna’s “Material Girl”) and a director (“Newsies,” “Hocus Pocus”). He’d signed on to choreograph and direct “High School Musical” because he recognized his younger self in the story — but also because he saw potential for an ambitious production, complete with original songs and colorful dance sequences.

Ortega successfully won support from Disney Channel executives to turn the original script into a “full-on musical,” which, at the time, was not a popular format for the network.

“The musical was dead, according to the industry,” Ortega told Business Insider. “The budget came in, and I was like, how the heck am I going to be able to do this?”

With only about a month to shoot and a few million dollars to spend, it was crucial to ensure that each piece to the puzzle fit perfectly.

“We made every dollar stretch and every minute mean something,” Ortega said. “We didn’t waste any time. Nothing ended up on the cutting room floor.”


Ashley Tisdale, Corbin Bleu, Lucas Grabeel, Vanessa Hudgens, Zac Efron, and Monique Coleman of

Ashley Tisdale, Corbin Bleu, Lucas Grabeel, Vanessa Hudgens, Zac Efron, and Monique Coleman on the set of “The Today Show” on March 30, 2006.

Jemal Countess/Getty Images



Ortega and his team eventually landed on Zac Efron and Vanessa Hudgens to play Troy Bolton and Gabriella Montez, a basketball star and a whiz kid who discover an unlikely love for theater. The high schoolers resolve to follow their dreams and, of course, fall in love in the process. Offscreen, Efron and Hudgens followed suit, dating for several years.

As “High School Musical” celebrates its 20th anniversary this week, Business Insider spoke with Ortega about the movie’s key casting decisions, the actors’ real-life relationships, and the potential for another sequel.

The sibling dynamic between Ashley Tisdale and Lucas Grabeel led Ortega to make their characters siblings


Lucas Grabeel and Ashley Tisdale as Ryan and Sharpay in

Lucas Grabeel and Ashley Tisdale as Ryan and Sharpay in “High School Musical.”

Disney



Is it true that you wanted to run the auditions for “High School Musical” like Broadway auditions?

I did. And I got in a little trouble for that in the beginning.

I remember Judy Taylor, who I adore, who was head of casting at Disney Channel for many, many years, came to me during our big final testing. We had about 25 and 30 kids for the finals. And then we narrowed it down to about 18. And I had them in the room for about six hours — they were playing basketball, they were dancing, they were singing, they were improvising. I was flipping them around and switching them around and looking at the chemistry that was in the room and looking at the promise that was in front of me.

The next day, Judy came back and said, “The agents are flipping out. They want to know what the heck’s going on over here. These kids have other auditions, other people to meet, and you’re holding them ransom.”

But then the next day, Judy came back to me and said that Zac Efron’s agent called her and said, “Zac said it’s the best audition he’s ever been to.” And that even if he didn’t get the part, it was worth being a part of the auditioning.

It was such fun. The kids in that room with me were having an absolute ball. I don’t think they’d ever been put through any kind of an audition like that, being West Coast actors and not East Coast theater actors. I put them through the mill.

Were any of the main cast members almost passed over because there were concerns about their stamina, or their singing and dancing abilities?

There were questions. I mean, I think everybody saw the chemistry between Zac and Vanessa from the very, very beginning and knew that it was palpable and that that was going to be hard to top, but there were also concerns about whether they could handle the responsibility. They were young. Vanessa was 15, Zac was 16, and we were putting them in a full-on musical that they had to carry.

Fortunately, we also had the support of Ashley Tisdale and all the other brilliant [actors], Corbin Bleu and Lucas Grabeel and Monique Coleman. And beyond that, with people like Alyson Reed and Bart Johnson. And so we had them surrounded with a lot of great energy and intelligence, and we did it.

But no, I don’t think anyone really was averse to any of the choices that we made. It was hard for me to get Ashley because she was already a big star for Disney Channel, and I think they were priming her for her own movie. And I was like, “Please!” I was crazy in love with what I knew she could do with this role, and she was delicious to work with.


Ashley Tisdale as Sharpay in

Ashley Tisdale as Sharpay in “High School Musical.”

Disney



I can’t imagine anyone else playing Sharpay.

Honestly, every day she brought something to the party, to the game. There were days where she would come in and she would say to me, “Don’t say anything! Don’t say anything! Can I show you something?” She was just really an improvisational genius, and she really had her arms wrapped around Sharpay, and we had the most fun developing that role together and working with [screenwriter] Peter Barsocchini, of course.

You know, in the beginning, Ryan and Sharpay weren’t brother and sister. They weren’t twins. They were just two characters in the high school that were both in the theater department. But the chemistry that they had together in the auditions, I said, “I think we should make them twins.” I said, “They’ve got something here that I think we could have a heck of a lot of fun with.” And everybody agreed, and we moved forward with that idea.

This is an interesting point, because Ryan and Sharpay are auditioning to play a couple in the musical, are they not?

Yes. [Laughs.] We didn’t change that. I don’t think we thought it through. I think we were a little busy.

Did any of the actors butt heads behind the scenes?

No. I mean, there was some really fun rapport between Lucas and Ashley that they incorporated into their work.

There was this wonderful kind of tug of war between the two of them. And then when the lights came on, and the cameras were rolling, it was just like they were onstage. They put it on.

We felt that. We saw that. We saw them bickering or challenging one another, and we just found it to be really great. And I didn’t have to ask them to be anything. All I had to do was just turn on the camera and get out of the way.

I was there to guide and direct and suggest and mold, but these kids brought a lot. They really did that. They studied, they cared. Day one, Zac said, “Don’t worry about time. Don’t worry about working us, Kenny. We all committed to do this. Let’s make it worth something. Let’s make this worth us all being here.”

Zac was initially really helpful in me sort of raising the bar on what I could expect from these young people. Because before that, other than “Newsies,” I hadn’t been really experienced in working with kids that young.

Zac Efron and Vanessa Hudgens lobbied for their characters to kiss in the first movie


Vanessa Hudgens and Zac Efron at the 2006 Emmys.

“High School Musical” won outstanding children’s program at the 2006 Emmys.

Mathew Imaging/FilmMagic for Academy of Television Arts and Sciences



Was there any concern about Zac and Vanessa potentially breaking up during the trilogy?

Well, I think you quietly have concern because you know that that could impact a kind of energy and comfort. And especially with younger kids, you want to make sure that it doesn’t change the sort of climate and ease that we walk into every day. But it didn’t weigh heavily on me. They were all friendly. They all got along. They all enjoyed each other’s company. There was no one that was over here and everybody over here. They really all enjoyed each other’s company. They were a tight-knit group of kids all through it. They were serving of one another, helpful to one another. And I don’t remember that weighing on me.

Certainly, no one said, “Hey, be careful.” No one really brought it up. And I wasn’t aware that they even had a kind of romance, a kind of care for one another in that capacity, until almost the end of the first movie. And I thought it was so silly that I didn’t pick up on it, but I was a little busy.

Was there a version of the movie in which Troy and Gabriella do kiss at the end?

I don’t think at the end of one, no. I don’t think we wanted that. And not because we knew that there would be a two. I just think that we felt that that was something that we could all hope and wish for, but that it wasn’t time for it.

I think Zac and Vanessa wanted it, if I’m not mistaken. I think both of them were like, “We could do a little kiss. I think that it would end the movie in a really lovely place.” And we said, “You already have. You’ve already ended the movie in a really, really lovely place. There’s all kinds of promise about where these two kids are going.”

Troy Bolton’s voice was originally a mix of Zac Efron’s and Drew Seeley’s, but Efron did all his own singing for the sequels


Zac Efron as Troy in

Zac Efron as Troy in “High School Musical.”

Disney



Zac has gone on to do other musicals like “Hairspray” and “The Greatest Showman,” which is maybe a surprise, given that he didn’t do all his vocals in the first movie.

He did part of it. A lot of people don’t know that. A lot of people think that he was lip-syncing the whole movie. He wasn’t.

Drew [Seeley] did an incredible job. Drew’s an amazing composer and lyricist and performer and actor and singer, and he helped us. But because the music for one was written before we had Zac, the music wasn’t written for Zac. And so there was some of the music there that was just out of his range. But he did a lot of it. And then Drew filled in some of the higher-register parts. But “High School Musical 2” and three is all Zac.

Whose decision was that? Was it Zac coming to you, saying, “I want to do the singing now,” or was it your call?

We all wanted him to do it because we all wanted everybody to be doing their own work. And it was hard for him. It was a challenge, but God bless him, he accepted the role, and he went along with us, and he sang all through all those scenes where you see him, he’s singing along with the track.

When we knew that we were going to make a second, it was on everybody’s plate. We’re going to write the songs now, knowing Zac’s voice, knowing Zac’s range and register, so he can deliver all the music for the next movie.

Ortega would sign on to do a fourth ‘High School Musical’ if the cast and crew were all in this together


The cast of

The cast of “High School Musical” performs “We’re All in This Together.”

Disney



In your mind, would Troy and Gabriella have made it as a couple? Twenty years later, are they still together?

Well, that would be unfair of me. I wouldn’t want to get in the way of Peter Barsocchini being able to write a fourth movie, if that’s the plan. So I wouldn’t want to throw anything out there, because as a director, I would want to be open to either way, whether they stayed together or whether they didn’t stay together, that if I was fortunate enough to be invited to come back and do it again and everyone wanted to, that I would be open to looking at whatever Peter wanted to put in front of us as what he would think the future brought for those characters.

I think all of us hope that they would be together, but maybe not necessarily as a couple, maybe just connected in some kind of wonderful, soulful, spiritual way. Friends, even. Who knows? We’ll see. I don’t know if it’s going to happen, but it’s been talked about.

So you’re not connected to a fourth movie right now?

No, no, I’m not. No one has reached out to me and said, “We’re doing it.” But I know that the fans have been asking, could we do some kind of coming back together, some kind of a reunion show? And hey, I’d just be happy with a nice dinner with everybody present and with no rush to get out after dessert.

But for the fans, I hope we could do something. I think that would be lovely. They’re deserving. They’ve been amazing. They’ve changed all of our lives.

This interview has been edited and condensed for length and clarity.




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Some Tesla shareholders say diverting Nvidia chips is further proof that Elon Musk doesn’t deserve a multibillion-dollar pay package

Several institutional shareholders of Tesla told Business Insider that Elon Musk’s decision to redirect a shipment of valuable Nvidia chips away from the EV company is further proof the CEO doesn’t deserve a multibillion-dollar pay package.

In May, a group of eight Tesla shareholders wrote a letter urging other investors to vote against Musk’s compensation package. The group is just one faction of a growing number of investors who said they plan to vote against the deal.

This package, now roughly worth $46 billion, was struck down in January by Delaware Chancery Court Chancellor Kathaleen McCormick, who said that the process to reach this “unfair price” for Musk was “deeply flawed.”

Tesla shareholders will vote on June 13 on whether to reinstate Musk’s deal.

But less than two weeks ahead of the shareholder vote, CNBC reported that Musk diverted a $500 million shipment of Nvidia chips, which are essential for powering artificial intelligence technology, away from Tesla and to his social media platform X instead.

The internal memo from Nvidia indicating Musk’s delay of the Nvidia chips procurement was from December, CNBC reported — months before the April earnings call in which the Tesla CEO insisted the automaker is an AI company. He also stated in the call that he would aggressively expand the number of Nvidia chips at Tesla from 35,000 to 85,000 units by the end of 2024.

In response to the CNBC report, Musk said on X that “Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse.”

“The south extension of Giga Texas is almost complete. This will house 50k H100s (Nvidia chips) for FSD training,” Musk added, referring to Tesla’s Full Self-Driving feature — a key component of the company’s promise to deliver autonomous taxis.

But some of the shareholders behind the effort to strike down Musk’s big payday are not convinced.

“The diversion of Nvidia’s processors to X and xAI is just another example of Tesla’s CEO reallocating Tesla’s resources in favor of his other businesses and treating Tesla as though it is his own coffer as a result of the lack of oversight by Tesla’s board,” Tejal Patel, the executive director of SOC Investment Group, wrote in an email to BI.

Patel added: “The key questions are why were these valuable processors ‘just sitting there’ in the first place, and if it was an operational issue, why was that not foreseen by management? Whatever decision-making there was for the processors to go unused by Tesla would have been up to CEO Musk.”

Musk did not respond to a request for comment from Business Insider.

SOC Investment Group is one of the eight shareholders that co-signed a letter urging investors to vote against the ratification of Musk’s stock options package and against the reelection of Musk’s brother, Kimbal, and James Murdoch for seats on Tesla’s board.

The group — made up of pension fund managers, an asset management firm, and a bank — also includes Amalgamated Bank, AkademikerPension, Nordea Asset Management, New York City Comptroller Brad Lander, SHARE, Unison, and United Church Funds.

In a statement to BI, Lander wrote that Musk’s decision to divert Nvidia chips away from Tesla “should be a “red flag to investors.”

“This sudden move adds to the growing concerns about Musk’s commitment to Tesla and highlights his glaring conflicts of interest,” he wrote. “There is a pressing need at Tesla for a genuinely independent board that will ensure Musk prioritizes company interests.”

Matthew Illian, the director of responsible investing for United Church Funds, similarly criticized Musk’s move to delay the shipment of Nvidia chips, stating that it was “further evidence” that the pay package “never achieved its purpose of maintaining the attention of Tesla’s CEO.”

“This is all about Elon building an empire for himself with investor money and we can’t let this happen,” he wrote in an email to BI.

It’s not immediately clear how much Tesla stock the eight shareholders own altogether.

Five of the eight shareholders, including Amalgamated Bank, Unison, Nordea, the New York City Retirement System, and United Church Funds, represent more than 4.9 million shares of Tesla stock.

As of Thursday, those shares are worth more than $878 million.

Spokespersons for SHARE, Nordea, and Unison could not be reached for comment or did not immediately respond for comment.

In addition to the eight shareholders, the California Public Employees’ Retirement System (CalPERS), which owns about 9.5 million shares of Tesla stock, signaled it would vote against Musk’s pay package.

“We do not believe that the compensation is commensurate with the performance of the company,” CalPERS CEO Marcie Frost told CNBC.

A CalPERS spokesperson declined to comment when asked about Musk’s decision to divert the shipment of Nvidia chips.


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