LOS ANGELES
Andrew A. Wiederhorn, the former CEO and current primary shareholder of publicly traded Fat Brands Inc. (FAT), has been indicted on federal charges. According to the Justice Department, Wiederhorn is accused of hiding $47 million in payments he received as shareholder loans from the IRS, FAT’s minority shareholders, and the broader investment community officials.
A federal grand jury on Thursday indicted Andrew A. Wiederhorn for hiding millions in compensation and taxable income with the help of FAT’s chief financial officer and his external accountant at Andersen advisory firm
Additionally, Wiederhorn is accused of evading substantial tax payments and prompting FAT Brands Inc. to breach the Sarbanes-Oxley Act, which prohibits public companies from offering direct or indirect personal loans to their CEOs.
“The indictment alleges that with the assistance of his co-defendants, Mr. Wiederhorn repeatedly evaded his taxes and the law as he engaged in a cover-up to avoid being accountable to shareholders,” said Krysti Hawkins, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Rather than continuing to fund his lavish lifestyle, Mr. Wiederhorn will face serious consequences for his alleged criminal actions.”
Wiederhorn’s attorney, Nicola Hanna, Partner at Gibson Dunn, called the charges “wrong” in a statement to KTLA in Los Angeles.
“These charges are wrong on both the facts and the law. Mr. Wiederhorn consulted and followed the advice of world-class professionals in all of his business dealings,” Hanna said. “He has led an extraordinarily successful company that has performed beyond expectations since the merger of FAT Brands and Fog Cutter Capital in 2020. We look forward to making clear in court that this is an unfortunate example of government overreach – and a case with no victims, no losses and no crimes.”
As CEO of Fat Brands, Wiederhorn oversaw brands such as Round Table Pizza, Fatburger and Johnny Rockets.
“The allegations contained in the indictment against Mr. Wiederhorn show that he is a serial tax cheat. His actions over decades hurt not only his company and its shareholders, but also every American taxpayer,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “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.”
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The defendants charged in the indictment are:
- Wiederhorn, of Beverly Hills
- William J. Amon, of Los Angeles, a certified public accountant, attorney, and one-time managing director of Andersen’s Los Angeles Office, who provided tax-advisory services to Wiederhorn, FAT, and FAT’s former affiliate, Fog Cutter Capital Corporation (FOG)
- Rebecca D. Hershinger, a Los Angeles-area resident who formerly served as FAT’s CFO and, in that role, certified FAT’s public filings
- Fat Brands Inc., a publicly traded global franchising company based in Beverly Hills acquired and developed casual-dining restaurant concepts, including Fatburger, Johnny Rockets, Hurricane Grill and Wings, Yalla Mediterranean, Ponderosa and Bonanza Steakhouses
All defendants are presumed innocent unless proven guilty
According to the indictment, Wiederhorn began disguising distributions to himself as shareholder loans approximately 30 years ago when he served as CEO of another company, Wilshire Credit Corporation (WCC).
After forgiving himself some $65 million in putative debts owed to WCC, Wiederhorn resolved a federal grand jury investigation into that and related conduct by pleading guilty in 2004 in federal court in Oregon to the payment of illegal gratuities and filing a false federal tax return.
FOG and its affiliates are successor corporate entities to WCC and its affiliates.
The indictment states that from 2006 through 2021, Wiederhorn was the subject of IRS efforts to collect personal income tax and trust fund taxes he owed personally and as a responsible party and guarantor for entities, including FOG.
The IRS’s efforts included levies and liens on Wiederhorn’s accounts and assets due to outstanding taxes he owed.
Beginning in 2016, the IRS assessed Wiederhorn penalties for FOG’s failure to pay trust fund taxes and failure to establish a payment plan.
According to the indictment, Wiederhorn’s unpaid personal income tax liability to the IRS totaled approximately $7,743,952 by March 2021, including statutory interest and penalties.
Beginning no later than 2010 and continuing through early 2021, Wiederhorn allegedly caused employees of FAT and FOG to compensate him by distributing to him approximately $47 million for his personal use and benefit.
The indictment alleges that Wiederhorn, Amon, Hershinger, and others miscategorized these distributions as “shareholder loans” and failed to disclose them as reportable compensation to the IRS, SEC, and the broader investing public.
According to the indictment, neither FAT nor FOG required Wiederhorn to post collateral, make interest payments, or observe any of the other commercial requirements and realities of true loans.
The indictment adds that Wiederhorn generally determined for himself the amount, timing, and form of extension and forgiveness of these “loans” without informing the FAT directors or FOG directors.
According to the indictment, after defendant FAT became an issuer of securities through its IPO [initial public offering], defendant Wiederhorn caused millions of dollars from defendant FAT’s accounts to be disbursed to defendant Wiederhorn and his family members for their benefit.
These disbursements were used to fund the purchase of private jet travel, vacations, a Rolls Royce Phantom, other luxury automobiles, jewelry, and a piano.
The indictment outlines several transfers of hundreds of thousands of dollars that Wiederhorn caused others at FAT to make directly from FAT accounts to pay Wiederhorn’s personal American Express credit-card debts.
“Wiederhorn, posing as both ‘lender’ and ‘borrower,’ caused defendant FAT and FOG to extend to him and then ‘forgive’ tens of millions of dollars in distributions made in the fraudulent form of loans – all while paying no income tax on these distributions and, in fact, using them to generate net operating losses to provide defendant FAT with financially beneficial tax treatment,” the indictment alleges.
Although FAT publicly claimed that it was “cooperating with the government” in connection with this investigation, after members of FAT’s Board communicated with the government, Wiederhorn removed every director other than himself in March 2023 and reconstituted FAT’s Board with a majority of non-independent directors under his control, according to the indictment.
Wiederhorn is charged with one count of endeavoring to obstruct the administration of the Internal Revenue Code, six counts of tax evasion, and one count of false statements and omission of material facts in statements to accountants in connection with audits and reviews.
Both Wiederhorn and Hershinger are charged with four counts of wire fraud, two counts of false statements and omission of material facts in statements to accountants in connection with audits and reviews, and one count of certifying faulty financial reports.
Wiederhorn, Hershinger, and FAT are charged with two counts of extension and maintenance of credit in the form of a personal loan from the issuer to the executive officer.
Hershinger is also charged with one count of making false statements to federal investigators, including denying that company funds were being used to pay Wiederhorn’s personal American Express bill.
Amon is charged with four counts of aiding and assisting in the filing of false tax returns.
Wiederhorn has also been charged in a separate indictment for illegally possessing a firearm and ammunition after being convicted of a felony.
The FBI and IRS Criminal Investigation are investigating this matter.
Separately, the U.S. Securities and Exchange Commission has also filed a civil enforcement action against Wiederhorn, Hershinger, FAT, and another FAT executive.
Assistant U.S. Attorneys Kevin B. Reidy of the Major Frauds Section and Adam P. Schleifer of the Corporate and Securities Fraud Strike Force are prosecuting this case.