Former Fatburger boss charged in connection with $47 million ‘fictitious loan’
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A federal grand jury this week indicted Andrew Wiederhorn, the former chief executive of the company that owns the Fatburger and Johnny Rockets restaurant chains, on federal charges alleging a $47 million “fictitious loan” scheme.
Wiederhorn, the current majority shareholder of the publicly traded company Fat Brands Inc., is accused of hiding millions of dollars in reportable compensation and taxable income from the Internal Revenue Service and evading the payment of millions of dollars in taxes, according to the indictment handed down Thursday.
The company’s money – classified as “shareholder loans” – was paid to Wiederhorn and his family “for their personal benefit,” according to the indictment. Some of that money was used to finance private jet trips, vacations, a nearly half-million-dollar Rolls-Royce Phantom, other luxury automobiles, jewelry and a piano.
According to the indictment, Wiederhorn “had no intention of repaying these phony ‘loans.’
“Instead of caring for shareholders, defendant allegedly treated the company as his personal slush fund, in violation of federal law,” said US Atty. Martin Estrada said in a statement.
Nicola Hanna, Wiederhorn’s lawyer, called the accusations “factually and legally erroneous.”
“Mr. Wiederhorn consulted and followed the advice of world-class professionals in all of his business dealings,” Hanna, the former U.S. attorney for the Central District of California, said in a statement. “We look forward to clarifying in court that this is an unfortunate example of government overreach – and a case without victims, without losses and without crimes.”
Wiederhorn was allegedly assisted by the company’s former chief financial officer, Rebecca D. Hershinger, and its outside accountant, William J. Amon, who were also charged in the 22-count indictment. Fat Brands was also charged.
Brian Hennigan, attorney for FAT Brands Inc., said the accusations were “unprecedented, unwarranted, unfounded and unfair.” He added that they were “based on conduct that ended more than three years ago and ignore the company’s cooperation with the investigation.”
Hershinger’s defense attorney, Michael Proctor, called the accusations “baseless” in a statement and said that while Hershinger worked at FAT Brands, “she disclosed all material facts to the company’s external auditors.” company and has complied with its legal and ethical obligations.
The indictment lists a wide variety of counts against Wiederhorn, including wire fraud, attempting to obstruct the administration of the IRS, tax evasion and making false statements and failure to material facts in reporting to accountants in connection with audits and reviews.
Between 2010 and 2021, according to the indictment, Wiederhorn took money from Fat Brands and its subsidiary Fog Cutter Capital Group Inc.
In 2022, the Times reported that Wiederhorn was under criminal investigation. As part of the investigation, his son’s Los Angeles home was searched by agents; investigators also sought to search Wiederhorn’s Beverly Hills mansion.
Last year, Wiederhorn publicly announced he was resigning as CEO, framing it as a way to “remove the distraction” from the ongoing federal investigation. However, a few weeks later, Wiederhorn “removed all directors other than himself” from the Fat Brands board and “reconstituted” a new board with directors “under his control,” according to the ‘indictment.
Wiederhorn graduated from USC and, at age 21, founded Wilshire Credit Corp., benefiting from a $300 million investment from Eli Broad, an early backer. The Oregon native returned to Portland and launched Fog Cutter Capital in 1997. With a net worth of approximately $140 million, Fog Cutter purchased a majority stake in Fatburger in 2003.
At that time, federal investigators were looking into Wiederhorn’s businesses, and in 2004 he pleaded guilty in U.S. District Court in Oregon to paying an illegal gratuity to an associate and filing a false tax return. He served 15 months in federal prison and paid a $2 million fine.
The day before his guilty plea, Fog Cutter Capital paid him a $2 million bounty and agreed to continue paying him while he was behind bars.
Out of prison, Wiederhorn tried to burnish his reputation and appeared on the reality TV show “Undercover Boss” at a Fatburger store in Arizona. He moved to Southern California and told The Times in 2017 that he never intentionally did anything wrong.
He took Fat Brands public around 2017 and led the expansion of more than 2,000 outlets, including sports bar Twin Peaks, Italian restaurant chain Fazoli’s, Round Table Pizza and Marble Slab Creamery.
Yet investors chafed at Wiederhorn’s business decisions and accused him in litigation of “looting” money from the company while his relatives enjoyed six-figure salaries on the company’s payroll. A shareholder complaint filed in 2021 accused him of “bringing Fat Brands into the ground and draining it of cash.”
Last month, Wiederhorn went on Fox Business to talk about California’s minimum wage increase for fast food workers. He said prices would rise because “operators can’t afford it.”
“Everyone wants their employees to make more money, but it comes at a cost and a restaurateur just doesn’t have that margin,” he said.
California Daily Newspapers