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Fat Brands Chairman Charged With $47-Million-Fraud 'Spent Money' on Luxury Vacations, Expensive Cars

Federal charges rock Fat Brands as chairman faces allegations of diverting millions for personal use.
Cover Image Source: The entrance to Fatburger | Getty Images | Photo by George Rose
Cover Image Source: The entrance to Fatburger | Getty Images | Photo by George Rose

In a stunning turn of events, Fat Brands, the parent company of popular restaurant chains including Fatburger and Johnny Rockets, finds itself at the center of a major legal storm, per Quartz. The Justice Department has charged the company's chairman, Andy Wiederhorn, and several other key figures with perpetuating a multi-million dollar fraud scheme that has sent shockwaves through the financial community.

Unsplash | Photo by Datingscout
Fatburger joint | Unsplash | Photo by Datingscout

According to federal prosecutors, Wiederhorn orchestrated a scheme to siphon off millions of dollars from Fat Brands for personal expenses, including private jet travel, luxury vacations, and extravagant purchases like a Rolls Royce Phantom and expensive jewelry. The alleged fraud which lasted over a decade from 2010 to 2021 involved manipulating the company's finances to fund Wiederhorn's lavish lifestyle.

Records obtained from Wiederhorn's "FAT Card" and other credit cards suggest that personal expenses, such as family vacations to Aspen, Colo, and Saint Tropez, France were predominantly covered using company funds. Federal authorities are scrutinizing financial transactions and exchanges of value between Fat Brands and Fog Cutter as well as transactions involving Wiederhorn, his son Thayer, and their relatives, including spouses, romantic partners, parents, children, siblings, and in-laws.

The charges allege that Wiederhorn along with former CFO Rebecca Hershinger and accountant William Amon orchestrated a series of sham loans and cash transfers disguised as legitimate business expenses. These transfers totaling $47 million were used to fund Wiederhorn's extravagant lifestyle while leaving Fat Brands financially crippled.

Krysti Hawkins, Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office, issued a scathing statement condemning Wiederhorn's actions: "Rather than continuing to fund his lavish lifestyle, Mr. Wiederhorn will face serious consequences for his alleged criminal actions."

The fallout from these charges has been swift and severe. Fat Brands' stock plummeted by 28% following the news, wiping out millions of dollars in shareholder value. The company, which boasts a market value of $92 million, now faces an uncertain future as it grapples with the legal and financial implications of the scandal.

A fatburger neon sign at night in LA | Getty Images | Photo by Bob Berg
A Fatburger neon sign at night in LA | Getty Images | Photo by Bob Berg

In response to the charges, Fat Brands issued a statement vehemently denying any wrongdoing. Brian Hennigan, counsel for Fat Brands, described the charges as "unprecedented, unwarranted, unsubstantiated, and unjust," asserting that they are based on conduct that ended over three years ago and ignore the company's cooperation with the investigation.

Meanwhile, Andy Wiederhorn, who was previously convicted in a criminal case two decades ago, faces a slew of charges including wire fraud, tax evasion, and being a federal felon in possession of a handgun and ammunition. His attorney, Nicola Hanna, has vowed to fight the charges, labeling them as "government overreach" and insisting that there are "no victims, no losses, and no crimes." The Securities and Exchange Commission (SEC) has also filed a civil complaint against Fat Brands and Wiederhorn, alleging violations related to the fraudulent conduct. The complaint accuses Wiederhorn of using the company's funds to finance his extravagant lifestyle, including private jets, luxury vacations, and shopping sprees.

The fallout from this scandal extends beyond just legal and financial ramifications. Wiederhorn's alleged fraud reportedly accounted for nearly half of Fat Brands' revenue between 2017 and 2021, leaving the company struggling to pay its bills and meet its financial obligations.