Federal authorities said Friday they charged\u00a0Fat Brands\u00a0and its chair, Andy Wiederhorn, of committing a brazen scheme that netted him $47 million in bogus loans from the\u00a0restaurant\u00a0company that owns Fatburger, Johnny Rockets and Twin Peaks.<\/p>\n
Fat Brands, Wiederhorn and a few other people were\u00a0criminally indicted\u00a0by a federal grand jury in Los Angeles for wire fraud, tax evasion and other counts related to the alleged scheme.<\/p>\n
In a separate civil complaint, the Securities and Exchange Commission accused the company and Wiederhorn of violations related to the same conduct.<\/p>\n
\u201cThese charges are unprecedented, unwarranted, unsubstantiated and unjust,\u201d Fat Brands counsel Brian Hennigan said in a statement. \u201cThey are based on conduct that ended over three years ago and ignore the Company\u2019s cooperation with the investigation.\u201d<\/p>\n
Wiederhorn, who was convicted two decades ago in a criminal case that involved similar conduct, was separately criminally charged in an indictment in Los Angeles of being a federal felon in possession of a handgun and ammunition.<\/p>\n
Andy Wiederhorn, chairman of Fat Brands.<\/span>Jeffrey Neira \/ CBS via Getty Images file<\/span><\/p>\n \u201cWe look forward to making clear in court that this is an unfortunate example of government overreach \u2014 and a case with no victims, no losses and no crimes,\u201d Wiederhorn\u2019s attorney Nicola Hanna said.<\/p>\n As chief executive of Fat Brands, Wiederhorn, 58, allegedly directed the company to loan its own funds to him, with no intention of ever paying the \u201csham\u201d loans back, according to the indictment.<\/p>\n The SEC alleges that Wiederhorn then used the cash to pay for private jets, first-class airfare, luxury vacations, mortgage and rent payments, and nearly $700,000 in \u201cshopping and jewelry.\u201d<\/p>\n Wiederhorn stepped down as CEO last year, following the company\u2019s\u00a0disclosure\u00a0that the SEC was investigating him. In February, Fat Brands disclosed it had received a Wells Notice from the agency, meaning the SEC was planning to take action against it.<\/p>\n Wiederhorn\u2019s alleged fraud accounted for roughly 44% of Fat Brands\u2019 revenue from 2017 to 2021, which meant the company often wasn\u2019t able to pay its bills. In those situations, Wiederhorn would allegedly redirect funds from credit cards paid for by Fat back to the company with assistance from his son Thayer, who was then the company\u2019s chief marketing and is now its chief operating officer.<\/p>\n Fat Brands never disclosed the cash transfers as related party transactions to investors. In 2020, the cash transfers were written off after the company\u2019s merger with Fog Cutter Capital Group, Fat Brands\u2019 largest shareholder, which also happened to be majority owned by Wiederhorn, according to the SEC complaint.<\/p>\n Ron Roe, the company\u2019s vice president of finance and former chief financial officer, and Rebecca Hershinger, another former CFO, were also named as defendants in the SEC complaint. Hershinger and tax advisor William Amon were also named in the indictment.<\/p>\n Additionally, as far back as 2006, Wiederhorn has owed taxes for his personal income to the IRS. He also didn\u2019t report any of the so-called loans from Fat Brands as income, according to the indictment. As of March 2021, Wiederhorn owed $7.74 million to the IRS for his unpaid personal taxes.<\/p>\n Twenty years ago, he pleaded guilty to filing a false tax return and paying an illegal gratuity to an associate while leading Fog Cutter Capital. He paid a $2 million fine and spent more than a year in federal prison in Oregon. During his time in prison, Fog Cutter\u2019s board opted to pay him a bonus equal to the fine and continued paying his salary, a decision that attracted widespread criticism.<\/p>\n<\/p>\n Federal authorities said Friday they charged\u00a0Fat Brands\u00a0and its chair, Andy Wiederhorn, of committing a brazen scheme that netted him $47 million in bogus loans from the\u00a0restaurant\u00a0company that owns Fatburger, Johnny Rockets and Twin Peaks. Fat Brands, Wiederhorn and a few other people were\u00a0criminally indicted\u00a0by a federal grand jury in Los Angeles for wire fraud, tax […]<\/p>\n","protected":false},"author":0,"featured_media":4295,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4294"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4294\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4295"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}