By Sabela Ojea


The U.S. Securities and Exchange Commission filed fraud charges against FAT Brands, its current chairman and former chief executive and two former finance chiefs for allegedly making false claims about personal transactions.

The SEC charged the casual-dining franchising company, its founder and former Chief Executive Andrew Wiederhorn and Ron Roe and Rebecca Hershinger, the two former financial chiefs, with fraud.

The regulator alleges that for a four-year period ended March 2021, Wiederhorn used almost $27 million of the company's money for personal expenses such as mortgage payments, private jets and luxury vacations, and made them appear as loans to the company's affiliate Fog Cutter Capital with the help of Roe. Wiederhorn controls Fog Cutter Capital.

According to the complaint, Wiederhorn used his control over Fog Cutter Capital to take--in the form of a personal loan that he wrote off at his sole discretion and never repaid--the money that the affiliate was receiving from FAT Brands. He spent it on himself, the SEC said on Friday.

The SEC also alleges that Wiederhorn misled FAT's board of directors and auditors, leading them to believe that FAT's loans to Fog Cutter Capital were being used for its business expenses.

Wiederhorn's scheme stripped FAT Brands of around 40% of its revenue, the SEC alleges, often leaving the company with insufficient cash to pay its own bills. Wiederhorn allegedly instructed his son to wire over $9 million into FAT, concealing that Wiederhorn used millions of FAT's funds for his own personal spending and that FAT was otherwise unable to pay its own bills, according to the SEC charges.

The complaint comes shortly after the U.S. Justice Department said a federal grand jury indicted Wiederhorn, Hershinger and William Amon, a one-time managing director with accounting firm Andersen who provided tax-advisory services to Wiederhorn, for an alleged concealment of $47 million in distributions Wiederhorn allegedly received in the form of shareholder loans.

In a statement earlier Friday, Brian Hennigan of Hueston Hennigan, counsel for FAT Brands, said the company would "take all necessary action to defend itself, while seeking a just resolution to these charges."


Write to Sabela Ojea at sabela.ojea@wsj.com


(END) Dow Jones Newswires

05-10-24 1640ET