![Fat Brands and its president, Andy Wiederhorn, indicted in connection with million loan scheme Fat Brands and its president, Andy Wiederhorn, indicted in connection with million loan scheme](https://i0.wp.com/image.cnbcfm.com/api/v1/image/107413310-1715350426964-Screenshot-2024-05-10-at-101240_AM.jpg?v=1715356027&w=1920&h=1080&w=1920&resize=1920,1080&ssl=1)
Andy Wiederhorn, former CEO of Fatburger.
CNBC
Federal authorities were charged Friday Grease marks and its president Andy Wiederhorn for committing a brazen scheme that netted him $47 million in bogus loans from the restaurant company that owns Fatburger, Johnny Rockets and Twin Peaks.
Fat Brands, Wiederhorn and several others were criminally indicted by a federal grand jury in Los Angeles on wire fraud, tax evasion and other charges related to the alleged scheme.
In a separate civil complaint, the Securities and Exchange Commission accused the company and Wiederhorn of violations related to the same conduct.
Wiederhorn, who was convicted twenty years ago in a criminal case involving similar conduct, was separately charged in a Los Angeles indictment with being a federal felon in possession of a firearm. fist and ammunition.
As chief executive of Fat Brands, Wiederhorn, 58, allegedly directed the company to lend him its own funds, with no intention of ever repaying these “fictitious” loans, according to the indictment.
The SEC alleges that Wiederhorn then used the money to pay for private jets, first-class airline tickets, luxury vacations, mortgages and rent, and nearly $700,000 in “shopping and jewelry.”
Wiederhorn resigned as CEO last year, following the company’s revelation that the SEC was investigating him. In February, Fat Brands revealed that it had received a Wells Notice from the agency, meaning the SEC was considering taking action against it.
Wiederhorn’s alleged fraud accounted for approximately 44% of Fat Brands’ revenue from 2017 to 2021, which meant the company was often unable to pay its bills. In these situations, Wiederhorn allegedly redirected funds from credit cards paid by Fat back to the company with the help of his son Thayer, who was then the company’s chief marketing officer and is now its chief operating officer.
Fat Brands never disclosed cash transfers to investors as related party transactions. In 2020, the cash transfers were canceled after the company merged with Fog Cutter Capital Group, Fat Brands’ largest shareholder, which was also majority-owned by Wiederhorn, according to the SEC complaint.
Ron Roe, the company’s vice president of finance and former CFO, and Rebecca Hershinger, another former CFO, were also named as defendants in the SEC’s complaint. Hershiner and tax attorney William Amon were also named in the indictment.
Additionally, as early as 2006, Wiederhorn owed taxes on his personal income to the IRS. He also did not report any of the so-called loans from Fat Brands as income, according to the indictment. As of March 2021, Wiederhorn owes the IRS $7.74 million for his unpaid personal taxes.
Twenty years ago, he pleaded guilty to filing a false tax return and paying an illegal gratuity to an associate while he ran Fog Cutter Capital. He paid a $2 million fine and spent more than a year in a federal prison in Oregon. While in prison, Fog Cutter’s board chose to pay him a bonus equal to the fine and continued to pay him his salary, a decision that drew widespread criticism.
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