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Ex-Fatburger, Johnny Rockets CEO accused of ‘cover-up’ in $47M scheme to keep away from taxes

Ex-Fatburger, Johnny Rockets CEO accused of ‘cover-up’ in $47M scheme to keep away from taxes



A federal grand jury indicted the previous CEO of Fat Brands, Inc. this week for what they mentioned was a years-long scheme to distribute $47 million of shareholder funds disguised as loans to himself to keep away from paying taxes.

Andrew A. Wiederhorn, of Beverly Hills, who continues to be the controlling shareholder of the corporate behind such restaurant chains as Fatburger and Johnny Rockets, was accused of conspiring with the corporate’s CFO and an accountant to cover the disbursements to himself over greater than a decade.

By reporting this revenue as shareholder loans, Wiederhorn was in a position to keep away from paying hundreds of thousands of {dollars} in taxes, the U.S. Department of Justice’s Los Angeles workplace mentioned Friday, May 10.

The indictment alleges that he used the corporate funds “to fund the acquisition of private-jet journey, holidays, a Rolls Royce Phantom, different luxurious vehicles, jewellery and a piano.”

“Mr. Wiederhorn repeatedly evaded his taxes and the legislation as he engaged in a cover-up to keep away from being accountable to shareholders,” Krysti Hawkins, appearing assistant director of the FBI’s L.A. area workplace, mentioned in an announcement.

Also named as defendants within the indictment are Fat Brand’s former CFO, Rebecca D. Hershinger, and William J. Amon, an accountant who offered tax-advisory companies to Wiederhorn and the corporate.

Fat Brands itself can also be listed as a defendant.

In an announcement, Fat Brands known as the fees “unprecedented, unwarranted, unsubstantiated, and unjust.”

“They are based mostly on conduct that ended over three years in the past and ignore the corporate’s cooperation with the investigation,” the corporate’s assertion mentioned.

The indictment additionally alleges that a number of transfers of lots of of 1000’s of {dollars} had been constituted of Fat Brands accounts to pay Wiederhorn’s private American Express bank card money owed.

Prosecutors contend that Wiederhorn by no means repaid any of the so-called firm loans, which had been primarily “forgiven” by the corporate, “all whereas paying no revenue tax on these distributions and, in truth, utilizing them to generate web working losses to offer defendant (Fat Brands) with financially useful tax remedy.”

Wiederhorn is charged with one rely of endeavoring to hinder the administration of the Internal Revenue Code, six counts of tax evasion and one rely of false statements and omission of fabric details in statements to accountants in reference to audits and critiques. He and Hershinger are additionally charged with 4 counts of wire fraud, two counts of false statements and omission of fabric details in assertion to accountants, and one rely of certifying defective monetary stories.

Wiederhorn, Hershinger and Fat Brands are charged with two counts of extension and upkeep of credit score within the type of private mortgage from issuer to govt officer. Hershinger can also be charged with one rely of creating false statements to federal investigators, together with, amongst issues, denying that firm funds had been getting used to pay Wiederhorn’s private American Express invoice.

Amon is charged with 4 counts of aiding and aiding the submitting of false tax returns.

Wiederhorn was additionally charged in a separate indictment for illegally possessing a firearm and ammunition after being convicted of a felony.

City News Service contributed to this report.

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