SEC Charges Restaurant Group FAT Brands Inc., its Chairman and Former CEO, and its Two Former CFOs with Defrauding Investors

The Securities and Exchange Commission announced today that it filed fraud charges against FAT Brands Inc. (“FAT”), its founder, former CEO, and current Chairman, Andrew Wiederhorn (“Wiederhorn”), and its former CFOs, Ron Roe (“Roe”) and Rebecca Hershinger (“Hershinger”) concerning FAT’s disclosures about related person transactions with Wiederhorn and his family.

According to the SEC’s complaint, FAT owns restaurant brands, including Fatburger, Johnny Rockets, and Twin Peaks. The complaint alleges that, from October 2017 through March 2021, Wiederhorn used almost $27 million of FAT’s cash on his personal expenses, including private jets, first-class airfare, luxury vacations, his rent and mortgage payments, shopping, and jewelry. Wiederhorn, with Roe’s assistance, allegedly engaged in deceptive acts and made false and misleading statements to make it appear that the millions of dollars of FAT’s money he was spending on himself and on his family each year were company loans to FAT’s affiliate, Fog Cutter Capital Group, Inc. (“FCCG”), another company Wiederhorn controlled, for its business expenses.  According to the complaint, Wiederhorn used his control over FCCG to take—in the form a personal loan that he wrote off at his sole discretion and never repaid—the money that FCCG was receiving from FAT and spend it on himself.  The complaint further alleges that Wiederhorn misled FAT’s board of directors and FAT’s auditors, leading them to believe that FAT’s loans to FCCG were being used solely for FCCG’s business expenses and pre-existing liabilities.  The SEC alleges that Wiederhorn’s fraudulent scheme stripped FAT of approximately 40 percent of its revenue, often leaving the Company with insufficient cash to pay its own bills.  Wiederhorn allegedly instructed his son to wire over $9 million into FAT, concealing that Wiederhorn used millions of FAT’s funds for his own personal spending and that FAT was otherwise unable to pay its own bills.

Source: SEC Charges Restaurant Group FAT Brands Inc., its Chairman and Former CEO, and its Two Former CFOs with Defrauding Investors