FAT Brands CEO Andy Wiederhorn, as well as a family member, are being investigated by federal authorities as part of an inquiry into allegations of securities and wire fraud, money laundering, and attempted tax evasion, per a Los Angeles Times report published Friday.
According to search warrant records filed in court and reviewed by The Times, Wiederhorn’s son, Thayer, and daughter-in-law, Brooke Wiederhorn, had their California home in Beverly Grove raided by federal agents in December.
Brooke Wiederhorn, the daughter of “Real Housewives of Beverly Hills” star Kim Richards, was not named in court records. But filings show agents took tax documents, phones, digital storage devices, and other records from the residence.
Federal investigators also asked permission from a judge to search Andy Wiederhorn’s Beverly Hills home, although, per The Times, court filings did not reveal whether that took place.
In an affidavit from November, a special agent for the FBI alleges Andy Wiederhorn “devised and executed a fraudulent scheme” to avoid paying taxes. The agent, who focuses on complex financial crimes, according to The Times, also alleges Andy Wiederhorn received “millions of dollars in sham loans.”
A FAT Brands spokesperson told QSR Monday in a statement: “The government has informed FAT Brands of its investigation and the Company is fully cooperating. The Company is not a target of the investigation."
Andy Wiederhorn’s attorney, Douglas Fuchs of Gibson, Dunn & Crutcher, also shared a statement with QSR, saying, “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.”
“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,” Fuchs added.
The status of the investigation is unclear, The Times said. No charges have been filed against any individual or FAT Brands.
Laura Eimiller, a spokeswoman for the FBI office in L.A., told The Times she could not confirm or deny an investigation.
The affidavit outlined a string of credit card purchases by Andy Wiederhorn and family members, including $150,000 apparently for a down payment on a Rolls-Royce and $183,500 at a London jeweler, per The Times. The affidavit alleges these purchases were “paid primarily” out of accounts held by an affiliate of FAT Brands. Additionally, it alleges Andy Wiederhorn generated millions of American Express rewards points by routing company money through his son’s PayPal account.
The FBI special agent went on to say there was probable cause Andy Wiederhorn “engaged in the following criminal conduct,” listing tax offenses, misrepresentations to investors, and fraud offenses “relating to personal expenses that Wiederhorn caused FAT ... to pay,” The Times said.
Part of the inquiry also looked into whether Andy Wiederhorn filed a false tax return. According to court filings, his 2018 tax return listed income of $403,311. In 2017, $395,508.
Yet, per The Times, applications for a car loan and home purchase in 2018 stated he earned $200,000 per month, or about $2.4 million per year.
Wiederhorn entered into several “installment agreements” to pay back taxes, the publication added. Filings report he was complying with the process, but as of November 2021, he owed nearly $3 million in personal income taxes, penalties, and interest.
In the affidavit, the FBI agent also alleges Andy Wiederhorn “converted” money from FAT Brands and its affiliates via credit cards that show purchases at Dolce & Gabbana, Giorgio Armani, and Restoration Hardware, The Times reported.
From October 2017 (FAT Brands’ IPO) to May 2019, roughly $5 million from the company or its subsidiaries went to cover various Wiederhorn credit card balances, the court filing stated.
FAT Brands was one of 2021’s busiest restaurant groups. The company made headlines during the summer when it announced the purchase of Global Franchise Group for a price tag of $442.5 million.
At the time, it was the second-largest restaurant deal of 2021, second only to NPC International's $801 million bankruptcy sale to Wendy's franchisees and Flynn Restaurant Group (the biggest in 2021 overall was RBI's $1 billion purchase of Firehouse Subs). Soon, FAT Brands portfolio grew to 14 brands with the addition of Round Table Pizza, Marble Slab Creamery, Great American Cookies, Pretzelmaker, and Hot Dog on a Stick.
Two months later, FAT Brands announced an agreement to purchase sports bar Twin Peaks for $300 million, and in another two months, it struck a deal to buy Fazoli's for $130 million. The company finished the calendar with a $20 million acquisition of 23-unit Native Wings and Grill.
In total, FAT Brands spent nearly $900 million in five months. By year’s close, it boasted a platform with 17 concepts, 2,300 franchised and company-run locations globally, and systemwide sales of roughly $2.3 billion. The company operates in 40 countries and 48 states and partners with 800 franchisees, half of which are multi-unit operators. In addition to those 2,300 stores, FAT Brands claims a pipeline of roughly 800 restaurants set to open in the next four or five years.
Before 2021’s stretch, the company spent $25 million in September 2020 to buy Johnny Rockets, a move that doubled FAT Brands' footprint.
In 2004, Andy Wiederhorn 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 served 15 months in federal prison in Sheridan, Oregon, and paid a $2 million fine.
Andy Wiederhorn told The Times in 2017 that he “adamantly denied doing anything wrong intentionally.”
“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,” he told the publication.
A shareholder lawsuit was filed in 2021, as well, against FAT Brands and Fog Cutter Capital Group. The suit alleges Fog Cutter used funds borrowed from FAT Brands to produce $27 million in cash advances over the course of several years. It claimed Fog Cutter owed FAT Brands $38.7 million and said the capital group forgave loans to Andy Wiederhorn ahead of FAT Brands’ merger with the firm. In January, a Delaware judge ruled the lawsuit could proceed.