Pakistani prospects eat at a Fatburger outlet in Karachi, Pakistan.
Rizwan-Tabassum | AFP | Getty Photographs
Fats Manufacturers shares fell greater than 20% Tuesday morning after the mum or dad firm of Fatburger and Johnny Rockets introduced that its CEO has been underneath investigation for months.
In a regulatory submitting, Fats Manufacturers mentioned the US Legal professional for the Central District of California and the Securities and Trade Fee notified the corporate in December that they’d begun investigating CEO Andrew Wiederhorn.
Based on the submitting, the federal government is searching for paperwork and supplies associated to the December 2020 merger of Fats Manufacturers with Fog Cutter Capital Group and transactions between Wiederhorn and people firms. Fog Cutter Capital is the biggest shareholder in Fats Manufacturers and Wiederhorn is the controlling shareholder.
Investigators are additionally trying into compensation, mortgage extensions, and different advantages that Wiederhorn or his household obtained. Wiederhorn’s son Thayer serves as the corporate’s chief working officer.
The disclosure adopted a report by the Los Angeles Instances on Saturday that allegations towards Wiederhorn embody securities and wire fraud, cash laundering and tried tax evasion. The newspaper additionally reported that federal brokers searched the house of Thayer Wiederhorn and his spouse Brooke – daughter of former Actual Housewives of Beverly Hills star Kim Richards – in December.
“The federal government has notified FAT Manufacturers of its investigation and the corporate is totally cooperating,” Fats Manufacturers mentioned in a press release to CNBC. “The corporate just isn’t a goal of the investigation.”
The corporate mentioned within the submitting that it’s unable presently to estimate the result or size of the federal government investigation.
In a press release to CNBC, Wiederhorn’s legal professional, Douglas Fuchs, mentioned his shopper categorically denies the allegations and intends to show the federal government is getting its details fallacious.
“These loans had been completely respectable and had been independently reviewed and permitted,” Fuchs mentioned. “As well as, Mr. Wiederhorn’s tax returns had been ready and permitted by impartial tax professionals and he has made funds underneath an IRS-approved plan.”
Fuchs additionally mentioned he couldn’t be extra particular concerning the allegations as a result of the federal government failed to offer them with a replica of the affidavit regardless of their requests.
The SEC didn’t instantly reply to a request for remark from CNBC. A consultant for the US Legal professional’s Workplace declined to remark.
This isn’t the primary time that Wiederhorn has been investigated for monetary crimes. In 2004, he pleaded responsible to submitting a false tax return and offering unlawful advantages to an worker whereas working Fog Cutter Capital. He paid a $2 million high quality and spent greater than a 12 months in federal jail in Oregon. Throughout his time in jail, Fog Cutter’s board of administrators elected to pay him a bonus equal to the high quality and continued to pay his wage, a choice that drew widespread criticism.