Andrew Wiederhorn, the former CEO of FAT Brands, which owns Fatburger and Johnny Rockets, is denying federal charges alleging that he was involved in a $47-million "sham loan" scheme. According to indictment returned Thursday by a federal grand jury, Wiederhorn — assisted by FAT's former CFO and outside accountant at advisory firm Andersen — concealed millions of dollars in reportable compensation and taxable income and evaded the payment of millions of dollars in taxes.

"This defendant, the former CEO of a publicly traded company, is alleged to have engaged in a long-running scheme to defraud investors and the United States Treasury to the tune of millions of dollars," said United States Attorney Martin Estrada. "Instead of looking out for shareholders, the defendant allegedly treated the company as his personal slush fund, in violation of federal law. The Corporate and Securities Fraud Strike Force of my office focuses on rooting out corporate malfeasance by corporate insiders, and we will continue to protect the public by bringing these important prosecutions."

Brian Hennigan of Hueston Hennigan, counsel for FAT Brands Inc., said the charges were unfounded.

"Today FAT Brands was informed that it has been indicted on two violations of SOX 402 for arranging approximately $2.65 million in loans to Andy Wiederhorn," he wrote in a statement. "These charges are unprecedented, unwarranted, unsubstantiated, and unjust. They are based on conduct that ended over three years ago and ignore the Company's cooperation with the investigation."

Krysti Hawkins, the acting assistant director in charge of the FBI's Los Angeles Field Office, said that Wiederhorn and his co-defendents engaged in a cover-up to avoid being accountable to shareholders.

"Rather than continuing to fund his lavish lifestyle, Mr. Wiederhorn will face serious consequences for his alleged criminal actions," she said in a statement.

Wiederhorn pleaded guilty over 20 years ago in U.S. District Court in Oregon to charges of paying an illegal gratuity to an associate and filing a false tax return. He served 15 months in prison and paid a $2 million fine.

Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office, said the allegations showed that Wiederhorn was a "serial tax cheat."

"His actions over decades hurt not only his company and its shareholders, but also every American taxpayer," he wrote in a statement "Failing to honestly and accurately report income shortchanges Americans, and places undue strain on honest taxpayers. CI is committed to investigating this sort of criminal behavior to ensure accountability and equity in the tax system."

FAT Brands owns 18 brands with $2.5 billion in global sales and 2,300 locations worldwide. Wiederhorn stepped down as CEO last year after disclosing that the U.S. Securities and Exchange Commission was investigating him.

"The Company will continue executing on its operating plans and growth strategy," Hennigan said.

Wiederhorn has also been charged in a separate indictment for illegally possessing a firearm and ammunition after being convicted of a felony.

SEC files charges

Separately, the U.S. Securities and Exchange Commission has filed fraud charges against Wiederhorn, FAT and former CFOs Ron Roe and Rebecca Hershinger, alleging that from October 2017 through March 2021, Wiederhorn used almost $27 million of FAT's cash on his personal expenses, including private jets, first-class airfare, luxury vacations, his rent and mortgage payments, shopping and jewelry.

"Wiederhorn, with Roe's assistance, allegedly engaged in deceptive acts and made false and misleading statements to make it appear that the millions of dollars of FAT's money he was spending on himself and on his family each year were company loans to FAT's affiliate, Fog Cutter Capital Group, another company Wiederhorn controlled, for its business expenses," according to a release issued by the SEC.

According to the complaint, Wiederhorn used his control over FCCG to take — in the form a personal loan that he wrote off at his sole discretion and never repaid — the money that FCCG was receiving from FAT and spend it on himself. The complaint also alleges that Wiederhorn misled FAT's board of directors and FAT's auditors, leading them to believe that FAT's loans to FCCG were being used solely for FCCG's business expenses and pre-existing liabilities. The SEC alleges that Wiederhorn's fraudulent scheme stripped FAT of approximately 40% of its revenue, 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.

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