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Ex-Fatburger boss used company funds for Rolls-Royce and other luxuries in $47-million scheme, indictment says

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Ex-Fatburger boss used company funds for Rolls-Royce and other luxuries in -million scheme, indictment says

A federal grand jury this week indicted Andrew Wiederhorn, the former chief executive of the company that owns the Fatburger and Johnny Rockets restaurant chains, on federal charges alleging a $47-million “sham loan” scheme.

Wiederhorn, the current controlling shareholder of the publicly traded Fat Brands Inc., is accused of concealing millions of dollars in reportable compensation and taxable income from the Internal Revenue Service and evading the payment of millions in taxes, according to the indictment returned Thursday.

Company money — categorized as “shareholder loans” — was disbursed to Wiederhorn and his family “for their personal benefit,” according to the indictment. Some of that money went toward private-jet travel, vacations, a nearly half-million-dollar Rolls-Royce Phantom, other luxury automobiles, jewelry and a piano.

According to the indictment, Wiederhorn “had no intention of repaying these sham ‘loans.’”

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“Instead of looking out for shareholders, the defendant allegedly treated the company as his personal slush fund, in violation of federal law,” U.S. Atty. Martin Estrada said in a statement.

Nicola Hanna, Wiederhorn’s attorney, referred to the charges as “wrong on both the facts and the law.”

“Mr. Wiederhorn consulted and followed the advice of world-class professionals in all of his business dealings,” Hanna, the former U.S. attorney for the Central District of California, said in a statement. “We look forward to making clear in court that this is an unfortunate example of government overreach — and a case with no victims, no losses and no crimes.”

Wiederhorn was allegedly assisted by the company’s former chief financial officer, Rebecca D. Hershinger, and his outside accountant, William J. Amon, who were also charged in the 22-count indictment. Fat Brands has also been charged.

Brian Hennigan, counsel for FAT Brands Inc., said the charges were “unprecedented, unwarranted, unsubstantiated and unjust.” He added that they were “based on conduct that ended over three years ago and ignore the company’s cooperation with the investigation.”

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Hershinger’s defense attorney, Michael Proctor, in a statement called the charges “baseless” and said that, while Hershinger was at FAT Brands, “she disclosed all material facts to the company’s outside auditors, and complied with her legal and ethical obligations.”

The indictment lists a wide variety of felony counts against Wiederhorn, including wire fraud, endeavoring to obstruct the administration of the IRS, tax evasion and false statements and omission of material facts in statements to accountants in connection with audits and reviews.

Between 2010 and 2021, the indictment alleges, Wiederhorn took the money from Fat Brands and its affiliate, Fog Cutter Capital Group Inc.

In 2022, The Times reported that Wiederhorn faced a criminal probe. As part of the inquiry, his son’s L.A. home was raided by agents; investigators also sought to raid Wiederhorn’s Beverly Hills mansion.

Last year, Wiederhorn publicly announced he was stepping down as CEO, framing it as a way to “eliminate the distraction” of the ongoing federal probe. Weeks later, however, Wiederhorn “removed every director other than himself” from the board of Fat Brands and “reconstituted” a new board with directors “under his control,” according to the indictment.

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Wiederhorn graduated from USC, and at age 21 founded Wilshire Credit Corp., drawing in a $300-million investment from Eli Broad, an early backer. The Oregon native returned to Portland and launched Fog Cutter Capital in 1997. With a net worth of about $140 million, Fog Cutter bought a controlling interest in Fatburger in 2003.

Around that time, federal investigators were scrutinizing Wiederhorn’s businesses, and in 2004 he pleaded guilty in U.S. District Court in Oregon to charges of paying an illegal gratuity to an associate and to filing a false tax return. He served 15 months in federal prison and paid a $2-million fine.

The day before his guilty plea, Fog Cutter Capital gave him a $2-million bonus and agreed to keep paying him while he sat behind bars.

Out of prison, Wiederhorn tried to burnish his reputation and appeared on the reality TV show “Undercover Boss” at a Fatburger outlet in Arizona. He moved to Southern California and told The Times in 2017 that he never intentionally did anything wrong.

He took Fat Brands public around 2017 and led an expansion of more than 2,000 outlets, including sports bar Twin Peaks, Italian restaurant chain Fazoli’s, Round Table Pizza and Marble Slab Creamery.

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Yet investors have chafed at Wiederhorn’s business decisions and in litigation accused him of “looting” the company of cash while his relatives enjoyed six-figure salaries on the corporate payroll. One shareholder suit filed in 2021 accused him of “running Fat Brands into the ground and bleeding it of its cash.”

Last month, Wiederhorn went on Fox Business channel to talk about California’s minimum wage increase for fast-food workers. He said prices would go up because “operators can’t afford it.”

“Everyone wants their employees to make more money, but there’s a cost to that and a restaurant operator just doesn’t have that margin,” he said.

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.

Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.

The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.

“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.

Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.

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Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.

The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.

“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”

Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.

Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.

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Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.

“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

Eaton wildfire survivors’ anger about Southern California Edison’s burying of electric wires in Altadena boiled over Tuesday with residents calling on government officials to temporarily halt the work.

In a letter to the Los Angeles County Board of Supervisors, more than 120 Altadena residents and the town’s council wrote that they had witnessed “manifest failures” by Edison in recent months as it has been tearing up streets and digging trenches to bury the wires.

The residents cited the unexpected financial cost of the work to homeowners and possible harm to the town’s remaining trees. They also pointed out how the work will leave telecommunication wires above ground on poles.

“The current lack of coordination is compounding the stress of a community still reeling from the Eaton Fire, and risks causing further irreparable harm,” the residents wrote.

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The council voted unanimously Tuesday night to send the letter.

Scott Johnson, an Edison spokesman, said Wednesday that the company has been working to address the concerns, including by looking for other sources of funds to help pay for the homeowners’ costs.

“We recognize this community has already faced a number of challenges,” he said.

Johnson said the company will allow homeowners to keep existing overhead lines connecting their homes to the grid if they are worried about the cost.

Edison’s crews, Johnson said, have also been trained to use equipment that avoids roots and preserves the health of trees.

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The utility has said that burying the wires as the town rebuilds thousands of homes destroyed in the fire will make the electrical grid safer and more reliable.

But anger has grown as work crews have shown up unexpectedly and residents learned they’re on the hook to pay tens of thousands of dollars to connect their homes to the buried lines.

Residents have also found the crews digging under the town’s oak and pine trees that survived last year’s fire. Arborists say the trenches could destroy the roots of some of the last remaining trees and kill them.

Amy Bodek, the county’s regional planning director, recently warned Edison that a government ordinance protects oak trees and that “utility trenching is not exempt from these requirements.”

Residents have also pointed out that in much of Altadena, the telecom companies, including Spectrum and AT&T, have not agreed to bury their wires in Edison’s trenches. That means the telecom wires will remain on poles above ground, which residents say is visually unappealing.

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“While our community supports the long-term benefits of moving utilities underground, the current execution by SCE is placing undue financial and planning burdens on homeowners, causing irreparable harm to our heritage tree canopy, and proceeding without adequate local oversight,” the residents wrote.

They want the project halted until the problems are addressed.

Edison announced last year that it would spend as much as $925 million to underground and rebuild its grid in Altadena and Malibu, where the Palisades fire caused devastation.

The work — which costs an estimated $4 million per mile — will earn the utility millions of dollars in profits as its electric customers pay for it over the next decades.

Pedro Pizarro, chief executive of Edison International, told Gov. Gavin Newsom last year that state utility rules would require Altadena and Malibu homeowners to pay to underground the electric wire from their property line to the panel on their house. Pizarro estimated it would cost $8,000 to $10,000 for each home.

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But some residents, who need to dig long trenches, say it will cost them much more.

“We are rebuilding and with the insurance shortfall, our finances are stretched already,” Marilyn Chong, an Altadena resident, wrote in a comment attached to the letter. “Incurring the additional burden of financing SCE’s infrastructure is not something we can or should have to do.”

Other fire survivors complained of Edison’s lack of planning and coordination with residents.

“I’ve started rebuilding, and apparently there won’t be underground power lines for me to connect with in time when my house will be done,” wrote Gail Murphy. “So apparently I’m supposed to be using a generator, and for how long!?”

Johnson said the company has set up a phone line for people with concerns or questions. That line — 1-800-250-7339 — is answered Monday through Saturday, he said.

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Residents can also go to Edison’s office in Altadena at 2680 Fair Oaks Avenue. The office is open Monday to Friday from 8 to 4:30.

It’s unclear if the Eaton fire would have been less disastrous if Altadena’s neighborhood power lines had been buried.

The blaze ignited under Edison’s towering transmission lines that run through Eaton Canyon. Those lines carry bulk power through the company’s territory. In Altadena, Edison is burying the smaller distribution lines, which carry power to homes.

The government investigation into the cause of the fire has not yet been released. Pizarro has said that a leading theory is that a century-old transmission line, which had not carried power for 50 years, somehow re-energized to spark the blaze.

The fire killed at least 19 people and destroyed more than 9,400 homes and other structures.

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

Oil prices rose and stocks moved slightly higher on Wednesday as investors tried to make sense of President Trump’s decision to extend the cease-fire with Iran despite doubts about the status of another round of peace talks.

An adviser to Mohammad Bagher Ghalibaf, the influential speaker of the Iranian Parliament, dismissed the cease-fire announcement, saying that it had “no meaning.” He equated the U.S. naval blockade with bombings, with commercial vessels coming under attack near the Strait of Hormuz, the crucial shipping lane that has been at the center of a growing energy crisis.

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