Former Portland executive Andrew Wiederhorn is being investigated for alleged fraud, attempted tax evasion, records show
LOS ANGELES — Federal authorities have investigated Andrew Wiederhorn, chief executive of the company that owns the Fatburger and Johnny Rockets restaurant chains, and reviewed the actions of a family member as part of an investigation into allegations of fraud. in securities and wire, money laundering and attempted tax evasion, according to court records.
During the investigation, federal agents raided the Beverly Grove home of Wiederhorn’s son Thayer and stepdaughter Brooke Wiederhorn in December, according to search warrant records filed in court.
Brooke is not named in court filings reviewed by the Los Angeles Times. She is the eldest daughter of actress and former “Real Housewives of Beverly Hills” star Kim Richards, and her nuptials to Thayer in 2014 were chronicled on the Bravo reality show.
Officers took phones, digital storage devices, tax documents and other documents from the couple’s residence, according to court documents.
Federal investigators have also sought permission from a judge to search the former Wiederhorn’s Beverly Hills mansion, though court documents do not indicate whether that raid took place. They also watched him walking his dogs near the property last year.
In a November affidavit describing the investigation, an FBI special agent focusing on complex financial crimes alleged that Wiederhorn, 56, “conceived and executed a fraudulent scheme” to avoid paying taxes and received millions of dollars in fictitious loans” through his companies.
The affidavit identifies years of credit card purchases by Wiederhorn, her children and other relatives – $183,500 at a London jeweler; $150,000 apparently for a down payment on a Rolls-Royce; more than $100,000 to a Beverly Hills divorce attorney – and alleges they were “paid primarily” in accounts held by a subsidiary of publicly traded FAT brands.
The filing also alleges that Wiederhorn generated millions of American Express reward points by funneling the company’s money through his son’s PayPal account.
The officer concluded that there was probable cause that Wiederhorn “engaged in the following criminal acts,” including tax offenses, misrepresentation to investors, and fraud “related to personal expenses that Wiederhorn did pay to FAT”.
The status of the investigation is unclear. No charges have been filed against anyone or against FAT Brands, of which Wiederhorn is the largest shareholder.
His attorney, Douglas Fuchs of Gibson, Dunn & Crutcher, said in a statement late Friday that “Mr. Wiederhorn categorically denies these allegations and in due course we will demonstrate that the government has the facts wrong. »
“These loans were completely legitimate and were independently reviewed and approved. Additionally, Mr. Wiederhorn’s tax returns were prepared and approved by independent tax professionals and he made payments under an IRS-approved plan,” Fuchs said in the statement.
“We are unable to comment further specifically on the allegations because despite our requests, the government has refused to provide us with a copy of the affidavit.”
A spokesperson for the U.S. Attorney’s Office declined to comment. Laura Eimiller, spokeswoman for the FBI office in Los Angeles, said she could not confirm or deny an investigation.
Beverly Hills-based FAT Brands said Friday night: “The government has notified FAT Brands of its investigation and the company is cooperating fully.”
The investigation comes nearly two decades after Wiederhorn was first ensnared in financial crimes. In 2004, he pleaded guilty in U.S. District Court in Oregon to paying an illegal gratuity to an associate and filing a false tax return. He spent 15 months in federal prison in Sheridan, Oregon, and paid a $2 million fine.
The day before his guilty plea, the company he ran, Fog Cutter Capital, gave him a $2 million bonus and agreed to continue paying him while he was incarcerated.
The arrangement prompted New York Times columnist Nicholas Kristof to give Wiederhorn his first “Greed Award”, writing, “I can’t think of a board that has ever so dishonored the principles of corporate governance by overpaying a CEO while he sits in jail.”
Once released, Wiederhorn embarked on a public relations campaign to restore his and his family’s reputation, including an appearance on “Undercover Boss” at a Fatburger restaurant in Mesa, Arizona.
“I’ve always categorically denied that I did anything intentionally wrong,” Wiederhorn told the Los Angeles Times in 2017. “I’m so grateful. I felt like I paid the fine I did the time I did everything I was supposed to do to make it go away and put it behind me.
This interview took place just before Wiederhorn took FAT Brands public, with the goal of growing from nearly 300 restaurants to 500 in the United States and abroad. The company has since grown to more than 2,000 outlets, mostly in franchise form, acquiring sports bar Twin Peaks, Italian restaurant chain Fazoli’s, Round Table Pizza and Marble Slab Creamery, among other brands.
Wiederhorn even considered buying Del Taco, but decided “it was going to be a lot of work,” he told a restaurant podcast last year.
The aggressive expansion took place against the backdrop of angry investors. In June 2021, a shareholder lawsuit against FAT Brands in Delaware accused Wiederhorn of “looting” the company and “bleeding it of its money”. The lawsuit referred to loans made to him that were later canceled and to numerous members of Wiederhorn’s family who were on the payroll and earning six-figure salaries.
Lawyers for Wiederhorn and the company countered that the suit is not alleging they did anything wrong.
It’s unclear what prompted the recent FBI investigation, whose agents appear to have pored over Wiederhorn’s banking, loan and tax records.
Part of the investigation described in the affidavit looked at whether Wiederhorn filed a false tax return, citing discrepancies between loan applications. His 2018 tax return showed income of $403,311 and in 2017 income was $395,508, according to the court filing.
But in car loan and home purchase applications in 2018, he said he made $200,000 a month, or about $2.4 million a year.
The affidavit makes numerous references to Wiederhorn’s “luxurious lifestyle” – a bill of $24,739 at Hotel Byblos in Saint-Tropez and $29,913 at Hotel Arts Barcelona – while the tax authority claimed unpaid income taxes over the past decade.
Wiederhorn entered into several “installment agreements” to repay the taxes. The filing says he was on his current payment plan, but as of November 2021, he owed nearly $3 million in personal income taxes, penalties and interest.
The FBI agent also explained how he claims Wiederhorn “converted” money from FAT Brands and its affiliates via credit cards showing purchases at Dolce & Gabbana, Giorgio Armani and Restoration Hardware.
One of Wiederhorn’s cards had subaccounts for credit cards issued to his six children, his mother, personal household workers, his ex-wife and others. Their fees include “significant expenses, which appear to be personal in nature,” such as doctor’s bills, clothing, shoes, mattresses, groceries, tutoring services and pet care.
From October 2017 – the date of FAT Brands’ IPO – to May 2019, about $5 million from the company or its subsidiaries was used to cover various Wiederhorn credit card balances, according to the court filing.
Thayer Wiederhorn, an executive at FAT Brands, is specifically mentioned in connection with an alleged scheme to funnel millions of dollars of the company’s money through American Express charges to a PayPal account bearing his name. The FBI agent suggests the apparent purpose was to generate credit card reward points for his father.
Court records describe the scheme as “back and forth transactions”, with money traveling from the younger Wiederhorn’s PayPal account, to his personal Bank of America accounts, and back to FAT or its affiliates.
The FBI agent calculated a cost of more than $250,000 in fees to PayPal out of approximately $9 million that traveled “round trip”.
These $250,000 fees were spent “for no legitimate purpose,” the FBI agent wrote, but “to advance Wiederhorn’s fraudulent scheme.”
(Times researcher Cary Schneider contributed to this report.)
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