The former CEO of Fat Brands, the holding company for burger chains Fatburger and Johnny Rockets, has been indicted for an alleged multi-year scheme to avoid paying taxes.
The U.S. Department of Justice accuses Andrew Wiederhorn of taking $47 million in shareholder loans, which were never repaid and then reported as losses to avoid paying millions of dollars in taxes. In a second indictment, he was also accused of being a felon in possession of a firearm.
“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,” Justice Department officials alleged. “Wiederhorn… and others miscategorized these distributions as ‘shareholder loans’ and failed to disclose as reportable compensation to the IRS, SEC and the broader investing public, the indictment alleges.”
Wiederhorn is still the controlling shareholder in Fat Brands.
“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 in a statement. “Instead of looking out for shareholders, the defendant allegedly treated the company as his personal slush fund, in violation of federal law.”
Also indicted were Rebecca D. Hershinger, the company’s former chief financial officer, and its accountant. Fat Brands was also named in the indictments.
The company, in a statement, called the charges “unprecedented, unwarranted, unsubstantiated, and unjust,” adding “they are based on conduct that ended over three years ago and ignore the Company’s cooperation with the investigation.”
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 official’s audits and reviews. Wiederhorn and Hershinger were also charged with four counts of wire fraud, two counts of false statements and omission of material facts, and one count of certifying faulty financial reports.