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Feds probe accusations against family behind Fatburger | #phishing | #scams | #hacking | #aihp



Federal authorities have been investigating Andrew Wiederhorn, chief executive of the company that owns the Fatburger and Johnny Rockets restaurant chains, and examining one of his family member’s actions as part of an inquiry into allegations of securities and wire fraud, money laundering and attempted tax evasion, court records show.

During the probe, federal agents in December raided the Beverly Grove home of Wiederhorn’s son Thayer and daughter-in-law Brooke Wiederhorn, according to search warrant records filed in court.

Brooke is not named in court records reviewed by The Times. She’s the oldest daughter of actress and erstwhile “Real Housewives of Beverly Hills” star Kim Richards, and her 2014 nuptials to Thayer were chronicled on the Bravo reality TV show.

Agents hauled away phones, digital storage devices, tax documents and other records from the couple’s residence, according to court filings.

Federal investigators also sought a judge’s permission to search the elder Wiederhorn’s Beverly Hills mansion, although court filings do not indicate whether that raid took place. They also monitored him walking his dogs by the property last year.

In a November affidavit outlining the investigation, a special agent for the FBI focusing on complex financial crimes alleged that Wiederhorn, 56, had “devised and executed a fraudulent scheme” to avoid paying taxes and received “millions of dollars in sham loans” through his companies.

The affidavit identifies years of credit card purchases by Wiederhorn, his 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” out of accounts held by an affiliate of the publicly traded FAT Brands.

The filing also alleges that Wiederhorn generated millions of American Express rewards points by routing company money through his son’s PayPal account.

The agent concluded there was probable cause that Wiederhorn “engaged in the following criminal conduct,” including tax offenses, misrepresentations to investors, and fraud offenses “relating to personal expenses that Wiederhorn caused FAT … to pay.”

The status of the investigation is unclear. No charges have been filed against any person 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 at the appropriate time we will demonstrate that the government has its facts wrong.”

“These loans were completely legitimate and were independently reviewed and approved. In addition, Mr. Wiederhorn’s tax returns were prepared and approved by independent tax professionals and he has been making payments under a plan approved by the IRS,” Fuchs said in the statement.

“We are unable to comment more specifically on the allegations because despite our requests, the government has refused to provide us with a copy of the affidavit.”

A spokesman for the U.S. attorney’s office declined to comment. Laura Eimiller, a spokeswoman for the FBI office in L.A., said she could not confirm or deny an investigation.

Beverly Hills-based FAT Brands said late Friday: “The government has informed FAT Brands of its investigation and the Company is fully cooperating.”

The inquiry 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 charges of paying an illegal gratuity to an associate and to filing a false tax return. He spent 15 months in federal prison in Sheridan, Ore., and paid a $2-million fine.

The day before he pleaded guilty, the company he led, Fog Cutter Capital, awarded him a $2-million bonus and agreed to keep paying him during his incarceration.

The arrangement prompted New York Times columnist Nicholas Kristof to bestow on Wiederhorn his inaugural “award for greed,” writing: “I can’t think of a board that has ever so disgraced the principles of corporate governance by overpaying a CEO even as he sits in prison.”

Once released, Wiederhorn embarked on a public relations campaign to restore his and his family’s reputations, including an appearance on “Undercover Boss” at a Fatburger restaurant in Mesa, Ariz.

“I’ve always adamantly denied doing anything wrong intentionally,” Wiederhorn told The Times in 2017. “I’m very grateful for it. I felt like I paid the fine. I did the time. I did everything I was supposed to do to make this go away and put it behind me.”

That interview came just before Wiederhorn took FAT Brands public, with the goal of expanding from nearly 300 restaurants to 500 in the U.S. and overseas. The company has since grown to more than 2,000 outlets — mostly as franchises — by acquiring sports bar Twin Peaks, Italian restaurant chain Fazoli’s, Round Table Pizza and Marble Slab Creamery, among other brands.

Wiederhorn even considered purchasing Del Taco, but decided “that was just going to be a lot of work,” he told a food service podcast last year.

The aggressive expansion has taken place amid a backdrop of some investor ire. In June 2021, a shareholder lawsuit filed against FAT Brands in Delaware accused Wiederhorn of “looting” the company and “bleeding it of its cash.” The suit referenced loans issued to him that were later forgiven and numerous members of Wiederhorn’s family who were on the payroll earning six-figure salaries.

Attorneys for Wiederhorn and the company have countered that the suit didn’t allege they had done anything wrong.

It is unclear what prompted the recent investigation by the FBI, whose agents appear to have pored over Wiederhorn’s banking, loan and tax records.

Part of the inquiry outlined in the affidavit examined whether Wiederhorn filed a false tax return, citing discrepancies between loan applications. His 2018 tax return listed income of $403,311 and, in 2017, income of $395,508, according to the court filing.

But in applications for a car loan and home purchase in 2018, he reported earning $200,000 per month, or about $2.4 million per year.

The affidavit makes ample references to Wiederhorn’s “luxurious lifestyle” — a $24,739 bill at Hotel Byblos in Saint-Tropez and $29,913 at Hotel Arts Barcelona — while the Internal Revenue Service has clamored for unpaid income taxes over the last decade.

Wiederhorn has entered into several “installment agreements” to pay back taxes. The filing notes he was complying with his current installment plan, but as of November 2021, he owed nearly $3 million in personal income taxes, penalties and interest.

The FBI agent also outlined how he believes Wiederhorn “converted” money from FAT Brands and its affiliates via credit cards that show 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 employees, his ex-wife and others. Their charges include “significant expenses, which appear to be personal in nature,” such as doctor bills, clothing, shoes, mattresses, groceries, tutoring services and pet care.

From October 2017 — the date of FAT Brands’ initial public offering — to May 2019, about $5 million from the company or its subsidiaries went to cover various Wiederhorn credit card balances, according to the court filing.

Thayer Wiederhorn, an executive at FAT Brands, is referenced specifically in connection with an alleged scheme to route millions of dollars of company money through American Express charges to a PayPal account bearing his name. The FBI agent suggests the apparent goal was to generate credit card rewards points for his father.

The court records describe the scheme as “round-trip transactions,” with money traveling from the younger Wiederhorn’s PayPal account, to his personal Bank of America accounts, and back to FAT or its subsidiaries.

The FBI agent tabulated a cost more than $250,000 in fees to PayPal out of about $9 million that traveled “round trip.”

Those $250,000 in fees were spent “for no legitimate corporate purpose,” the FBI agent wrote, but “to further Wiederhorn’s fraudulent scheme.”

Times researcher Cary Schneider contributed to this report.

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