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.’”

“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.”

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.

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.

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.

Methodology

The calculator keeps a running tally of the most common expenses of owning and renting. It also takes into account something known as opportunity cost — for example, the return you could have earned by investing your money. (Instead of spending it on a down payment, for example.)

The calculator assumes that the profit you would have made in your investments would be taxed as long-term capital gains and adjusts the bottom line accordingly. The calculator tabulates opportunity costs for all parts of buying and renting. All figures are in current dollars.

Tax law regarding deductions can have a significant effect on the relative benefits of buying. The calculator assumes that the house-related tax provisions in the Tax Cuts and Jobs Act of 2017 will expire after 2025, as written into law. Congress might, however, extend the cuts in their original form, or extend and modify them. You can use the toggle to see how your results may vary if the tax cuts are renewed in full, to get a sense of how big the tax impact might be on your decision.

Buying

Initial costs are the costs you incur when you go to the closing for the home you are purchasing. This includes the down payment and other fees.

Recurring costs are expenses you will have to pay monthly or yearly in owning your home. These include mortgage payments; condo fees (or other community living fees); maintenance and renovation costs; property taxes; and homeowner’s insurance. A few items are tax deductible, up to a point: property taxes; the interest part of the mortgage payment; and, in some cases, a portion of the common charges.
The resulting tax savings are accounted for in the buying total. If your house-related deductions are similar to or smaller than the standard deduction, you’ll get little or no relative tax savings from buying. If your house-related deductions are large enough to make itemizing worthwhile, we only count as savings the amount above the standard deduction.

Opportunity costs are calculated for the initial purchase costs and for the recurring costs. That will give you an idea of how much you could have made if you had invested your money instead of buying your home.

Net proceeds is the amount of money you receive from the sale of your home minus the closing costs, which includes the broker’s commission and other fees, the remaining principal balance that you pay to your mortgage bank and any tax you have to pay on profit that exceeds your capital gains exclusion. If your total is negative, it means you have done very well: You made enough of a profit that it covered not only the cost of your home, but also all of your recurring expenses.

Renting

Initial costs include the rent security deposit and, if applicable, the broker’s fee.

Recurring costs include the monthly rent and the cost of renter’s insurance.

Opportunity costs are calculated each year for both your initial costs and your recurring costs.

Net proceeds include the return of the rental security deposit, which typically occurs at the end of a lease.

The Sriracha shortage panic has returned.

In what’s become a dreaded tradition in recent years, fans of the beloved spicy chili sauce just got more bad news: The California company that popularized the condiment known for its distinctive fiery red color has halted production until after Labor Day.

Last week, Huy Fong Foods, which is based in Irwindale, sent a letter to its distributors blaming the four-month pause that could eventually snarl the sauce’s supply chain on the recent harvest of red jalapeño peppers.

“We have determined that it is too green to proceed with production as it is affecting the color of the product,” according to the letter, obtained by USA Today.

A representative for Huy Fong declined to comment Friday on the production halt or its cause, but the company said in the letter that it expected to resume production once the next chili season starts in September.

What caused past Sriracha shortages?

Huy Fong buys its peppers from several suppliers in Mexico, where dire drought conditions in recent years have hurt harvests and led to a water crisis so severe that taps ran dry in some towns.

Last spring, during a slowdown in production of the hot sauce — which is packaged in iconic bottles adorned with an image of a rooster and a neon green squeeze top — the company released a statement saying it was “still experiencing a shortage of raw material,” a sign of a dwindling harvest that climate experts warn will increasingly be the norm.

Another big problem with Huy Fong’s supply chain began with a bitter legal battle with the company’s longtime pepper grower.

For decades, the company got its peppers from Underwood Ranches in Ventura County, but the relationship eventually unraveled. In 2017, Huy Fong sued the grower, which quickly filed a cross-complaint accusing the hot sauce empire of a breach of contract that the grower said had cost it more than $20 million in losses.

Two years later, a Ventura County jury sided with the jalapeño farmer, awarding it $23 million.

What’s the beloved brand’s backstory?

David Tran, a Vietnamese refugee who upon arriving in the U.S. couldn’t find a hot sauce he liked, decided to create his own, founding Huy Fong Foods in Chinatown in 1980.

Through the years, he built it into a multimillion-dollar pepper empire that introduced Sriracha to the U.S. The company also makes a chili-garlic sauce and a ground chili paste called sambal oelek, both of which will also be affected by the production halt, USA Today reported. Today, Tran’s version of the company’s most famous sauce, which originated in Si Racha, Thailand, lines grocery shelves across the nation (when it’s in stock) and has won a cult following among devoted fans and foodies alike.

Bon Appétit named Sriracaha as its 2010 ingredient of the year.

How are consumers and competitors reacting?

Several Sriracha diehards posted in dismay this week, saying they planned to stock up before a potential shortage.

One person posted on X, linking to a story about the production halt and adding a message in all caps: “CAN’T WE HAVE ANYTHING NICE ANYMORE?” Someone else wrote that they planned to rush out and buy a case of bottles.

One of Huy Fong’s main competitors, Tabasco, bought the website srirachashortage.com, which redirects to a page on its site showing a large picture of its version of Sriracha, which save for swapping out the label and a gold top for the signature green one, still resembles Huy Fong’s bottle.

On its website, Underwood Ranches, the Ventura County grower that launched its own line of sauces after things went sour with Huy Fong, sells a three-pack of its Sriracha bottles adorned with an image of a dragon for around $27.

A tagline at the bottom of the Underwood site, which the grower indicated was trademarked, reads: “The peppers make the sauce.”

Huy Fong Foods has struggled to find a consistent and reliable supplier for its red peppers since its partnership ended with Underwood Ranches, Underwood said Friday.

“Creating a supply chain like that is far more complicated than people realize,” Underwood said. “The general public just takes for granted when these types of peppers are available. And there’s a much more sophisticated process to when you pick them and how you pick them.”