Andrew Wiederhorn is the former CEO and current controlling shareholder of Fat Brands Inc. Federal prosecutors allege he schemed with the company's chief financial officer and his personal accountant to evade taxes by disguising distributions of company funds to himself in the form of shareholder loans which were never repaid but used for personal extravagances including a Rolls Royce.
[Ads /]
"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,'' U.S. Attorney Martin Estrada said 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. The Corporate and Securities Fraud Strike Force of my office focuses on rooting out corporate malfeasance by corporate insiders, and we will continue to protect the public by bringing these important prosecutions.''
The federal indictment also names Fat Brands Inc. as a defendant, along with Wiederhorn's accountant, William Amon, and former Fat Brands CFO Rebecca Hershinger.
Wiederhorn pleaded not guilty to the charges Friday afternoon in downtown Los Angeles. His bond was set at $1 million, an amount that will be secured by his property in Beverly Hills, according to the U.S. Attorney's Office.
Prosecutors say Wiederhorn's illegal activities date by 30 years when he served as the CEO of Wilshire Credit Corp. and ultimately pleaded guilty in Oregon to federal charges of filing a false tax return and paying illegal gratuities.
While at Fat Brands, Wiederhorn allegedly received distributions of about $47 million in company funds -- disguised as "shareholder loans'' -- that were used for his personal use. The indictment alleges that he used the company funds "to fund the purchase of private-jet travel, vacations, a Rolls Royce Phantom, other luxury automobiles, jewelry and a piano.''
[Ads /]
The indictment also alleges that multiple transfers of hundreds of thousands of dollars were made from Fat Brands accounts to pay Wiederhorn's personal American Express credit card debts.
Prosecutors contend that Wiederhorn never repaid any of the so-called company loans, which were essentially "forgiven'' by the company, "all while paying no income tax on these distributions and, in fact, using them to generate net operating losses to provide defendant (Fat Brands) with financially beneficial tax treatment.''
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 audits and reviews. He and Hershinger are also charged with four counts of wire fraud, two counts of false statements and omission of material facts in statement to accountants, and one count of certifying faulty financial reports.
Wiederhorn, Hershinger and Fat Brands are charged with two counts of extension and maintenance of credit in the form of personal loan from issuer to executive officer.
Hershinger is also charged with one count of making false statements to federal investigators, including, among things, denying that company funds were being used to pay Wiederhorn's personal American Express bill.
[Ads /]
Amon is charged with four counts of aiding and assisting the filing of false tax returns.
Wiederhorn was also charged in a separate indictment for illegally possessing a firearm and ammunition after being convicted of a felony.
Copyright 2024, City News Service, Inc.