FAT Brands Shares Drop After U.S. Indicts Company, Former CEO
By Colin Kellaher
FAT Brands shares tumbled sharply on Friday after the casual-dining franchising company and former chief executive were indicted on federal charges related to the alleged concealment of $47 million in distributions he received in the form of shareholder loans.
Shares of the Los Angeles company were recently changing hands at $5.79, down 23%.
The Justice Department said a federal grand jury in Los Angeles indicted Andrew Wiederhorn, FAT Brands' controlling shareholder and former CEO; Rebecca Hershinger, the company's former financial chief; and William Amon, a one-time managing director with accounting firm Andersen who provided tax-advisory services to Wiederhorn, FAT Brands and former affiliate Fog Cutter Capital.
According to the DOJ, Wiederhorn, with help from Hershinger and Amon, concealed millions of dollars in reportable compensation and taxable income and evaded the payment of millions of dollars in taxes, while causing FAT Brands to violate the Sarbanes-Oxley Act's prohibition on direct and indirect extensions of credit to public-company CEOs in the form of a personal loan.
In a statement, FAT Brands said it has been indicted on two violations of the Sarbanes-Oxley Act for arranging about $2.65 million in loans to Wiederhorn, adding that the charges are "unprecedented, unwarranted, unsubstantiated, and unjust."
FAT Brands said the charges are based on conduct that ended more than three years ago and ignore the company's cooperation with the investigation. The company said it "will take all necessary action to defend itself, while seeking a just resolution to these charges."
FAT Brands in early 2022 disclosed that the company and Wiederhorn were under investigation, and Wiederhorn stepped down as CEO last year but has remained chairman of the company.
The DOJ said Wiederhorn, who previously pleaded guilty in 2004 to charges related to similar conduct, was also charged in a separate indictment for illegally possessing a firearm and ammunition after being convicted of a felony.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
May 10, 2024 13:04 ET (17:04 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
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