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Court records show notorious CEO Andrew Widhorn, who was a Portlander resident, under investigation for alleged fraud, money laundering, and attempted tax evasion.

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LOS ANGELES — Federal authorities are investigating Andrew Wedderhorn, CEO of the company that owns the Fatburger and Johnny Rockets restaurant chains, and are examining the actions of a family member as part of an investigation into allegations of securities and wire fraud, money laundering and attempted tax evasion, court records show.

During the investigation, federal agents in December raided the Beverly Grove home in which Wedderhorn’s son Thayer and daughter-in-law Brooke Wedderhorn live, according to search warrant records filed in court.

Brooke’s name is not mentioned in court records reviewed by the Los Angeles Times. She is the eldest daughter of former “Real Housewives of Beverly Hills” actress and star Kim Richards, and her 2014 wedding to Thayer has been dated on the Bravo reality TV show.

The agents seized phones, digital storage devices, tax documents and other records from the couple’s home, according to court files.

Federal investigators also requested a judge’s permission to search the larger Wedderhorn mansion in Beverly Hills, although court files do not indicate whether that raid took place. They also spotted him last year walking his dogs by the property.

In a November affidavit clarifying the investigation, an FBI special agent focused on complex financial crimes alleged that Wedderhorn, 56, “devised and implemented a fraudulent scheme” to avoid paying taxes and received “millions of dollars in fictitious loans” through businesses .

The affidavit identifies years of credit card purchases by Wiederhorn, his children and other relatives – $183,500 in a London jewelry store; $150,000 apparently for a down payment on Rolls-Royce; More than $100,000 to a Beverly Hills divorce attorney – and claims it was “paid in the first place” from accounts owned by a publicly traded FAT brand affiliate.

The filing also claims that Wiederhorn generated millions of American Express reward points by funneling company money through his son’s PayPal account.

The agent concluded that there was a probable cause of Wiederhorn’s “next criminal conduct,” including tax irregularities, misrepresentations of investors, and fraud offenses “related to personal expenses that Wiederhorn causes to be paid by the FAT…”

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The status of the investigation is unclear. No charges have been brought against anyone or against FAT Brands, of which Wiederhorn is the largest shareholder.

His attorney, Douglas Fox of Gibson, Dunn & Crocher, said in a statement late Friday that “Mr. Federhorn categorically denies these allegations and in due course we will prove that the government has its wrong facts.”

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 was making payments under a scheme approved by the IRS.

“We cannot comment more specifically on the allegations because, despite our requests, the government has refused to provide us with a copy of the affidavit.”

A spokesman for the US Attorney’s office declined to comment. Laura Emeller, an FBI spokeswoman in Los Angeles, said she could neither confirm nor deny the investigation.

“The government has notified FAT Brands of its investigation and the company is cooperating fully,” Beverly Hills-based FAT Brands said late Friday.

The investigation comes nearly two decades after Federhorn was first implicated in financial crimes. In 2004, he pleaded guilty in US District Court in Oregon to charges of paying an illegal bonus to a co-worker and filing a false tax return. He spent 15 months in federal prison in Sheridan, Oregon, and paid a $2 million fine.

The day before he pleaded guilty, the company he leads, Fog Cutter Capital, awarded him a $2 million reward and agreed to continue paying him while he was in prison.

The arrangement prompted New York Times columnist Nicholas Kristof to award Wiederhorn his inaugural “Greed Award,” writing, “I can’t think of a board of directors that has ever insulted the principles of corporate governance by overpaying a CEO even while sitting in prison.” .”

Once released, Wiederhorn embarked on a public relations campaign to restore his and his family’s reputation, including an appearance on “Undercover Boss” at the Fatburger Restaurant in Mesa, Arizona.

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Wiederhorn told the Los Angeles Times in 2017. “I’ve always vehemently denied doing any wrongdoing on purpose. I’m so grateful for that. I felt like I had paid the fine. I did that time. I did everything I was supposed to do to make this go away and put it behind me.”

That interview came right before Wiederhorn rolled out FAT Brands to the public, aiming to expand from nearly 300 restaurants to 500 in the United States and abroad. The company has since grown to more than 2,000 outlets – most of which are franchises – by acquiring the Twin Peaks sports bar, Italian restaurant chain Fazoli’s, Round Table Pizza and Marble Slab Creamery, among other brands.

Wiederhorn even considered buying Del Taco, but decided “that’s just going to be a lot of work,” he told a food service podcast last year.

This massive expansion took place against a backdrop of anger from some investors. In June 2021, she filed a lawsuit against shareholders of FAT Brands in Delaware accusing Wiederhorn of “plundering” the company and “bleeding its money.” The lawsuit cited loans to him that were later relinquished and several members of the Wiederhorn family who were on the payroll and on six-figure salaries.

Lawyers for Wiederhorn and the company responded that the lawsuit did not allege that they had done anything wrong.

It’s not clear what prompted the latest investigation by the FBI, whose agents appear to have bored Wiederhorn’s bank records, loans and taxes.

Part of the investigation described in the affidavit examined whether Wiederhorn had filed a false tax return, noting inconsistencies between loan applications. His 2018 tax return recorded income of $403,311, and in 2017, $395,508, according to a court filing.

But in applications for a car loan and a home purchase in 2018, he reported earning $200,000 a month, or about $2.4 million a year.

The affidavit makes many references to the Wiederhorn’s “luxury lifestyle” – a bill of $24,739 at the Byblos Hotel in St Tropez and $29,913 at the Hotel Arts in Barcelona – while the Internal Revenue Service has claimed unpaid income taxes for the past decade.

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Wiederhorn has several “installment agreements” to pay taxes. The filing notes he was sticking with with his current installment plan, but as of November 2021, he owed nearly $3 million in personal income taxes, fines, and interest.

The FBI agent also explained how he believed Wiederhorn money was “transferred” from FAT Brands and its affiliates via credit cards showing purchases at Dolce & Gabbana, Giorgio Armani and Restoration Hardware.

One of Wiederhorn’s cards contained sub-accounts for credit cards issued to his six children, his mother, personal household staff, his ex-wife, and others. Their fees include “significant, seemingly personal expenses,” such as doctor’s bills, clothing, shoes, mattresses, groceries, tutoring services, and pet care.

From October 2017 — the date of FAT Brands’ initial public offering — through May 2019, about $5 million went from the company or its affiliates to cover Wiederhorn credit card balances, according to a court filing.

Thayer Wiederhorn, a FAT Brands executive, was specifically cited in connection with an alleged scheme to funnel millions of dollars in company funds through American Express fees to a PayPal account bearing his name. The FBI agent notes that the obvious goal was to get reward points for his father’s credit cards.

Court records describe the scheme as “round trip transactions,” in which money is transferred from Wiederhorn’s PayPal account to his personal Bank of America accounts, and back to FAT or its affiliates.

An FBI agent has tabulated a cost of more than $250,000 in PayPal fees from among about $9 million moved “back and forth.”

The FBI agent wrote that this $250,000 fee was spent “without any legitimate legitimate purpose”, but “to further the fraudulent Weederhorn scheme”.

(Times researcher Carrie Schneider contributed to this report.)

© 2022 Los Angeles Times. visit latimes.com. Distributed by Tribune Content Agency, LLC.