With over 2,300 locations you would think you would have heard something about this story? Which Major Food franchise chain CEO is in trouble now?

You might be thinking this is the New York Bagel story where Joseph Smith got 3.5 years in prison for ripping off millions from unsuspecting franchise buyers. Or The Franchise Group's Brian Kahn who just had to step down as that the Securities and Exchange Commission was looking into some of his business deals. The Franchise Group owns American Freight, Buddy's Home Furnishings, The Vitamin Shoppe, Pet Supplies Plus, and Sylvan Learning.

No this is a different franchise guy. You may not know the company but you likely have heard of the franchises they own. FAT brands is in 40 countries, has 2380 restaurants and over 760 franchisees. They own Fatburger, Buffalo's Cafe, Ponderosa and Bonanza Steakhouses, Hurricane Grill and Wings, Elevation Burger, Johnny Rockets, Fazoli's, and recently purchased Global Franchise Group for 442 million.

So big company, why didn't anyone hear about the CEO being involved in a criminal SEC investigation, or that he had already served prison time for a similar conviction?

So here's the story. An investigation was launched amid details alleging that the CEO of FAT brands, Andrew Wiederhorn, had “devised and executed securities and wire fraud, money laundering and attempted tax evasion, including accusations of “devising and executing a fraudulent scheme” resulting in tax evasion and laundering “millions of dollars” in fraudulent loans from his companies.

Shareholders who own stock in the company had complained that the CEO was using company funds like a personal piggy bank. $183,500 to a London jeweler; $150,000 down payment on a Rolls-Royce; $100,000 to a Beverly Hills divorce attorney, shuttling millions through his sons PayPal account to get reward points. Also multi million dollar loans that were written off.

Agents had raided his son and daughter in laws home a while back during its multi- year investigation. Recently the SEC announced it had concluded its investigation and sent a "Wells Notice". The message says it may bring civil action and now allows the targeted company to respond.

In Wiederhorn's defense he claims this is all a big misunderstanding and he is just getting picked on because of his "history". What is his history?

Lets zip back to a 2006 article in Forbes: https://www.forbes.com/forbes/2006/06...

"Andrew Wiederhorn was accused of being at the center of one of the worst pension frauds ever committed by an investment adviser. As much as $160 million was drained from a Portland, Ore. investment company, and investors charged some of the money financed his lavish lifestyle, including renovating his $5 million mansion with such items as a $15,000 bathroom mirror. He pleaded guilty to charges of filing a false tax return and giving an illegal gratuity. Last year he finished his federal sentence after serving nearly 16 months and returned to Portland"

Wilshire Financial Services Group was a corporate entity that was at one point valued at $2 billion. Wiederhorn and his partner allegedly borrowed over $93 million from Wilshire, and had the company forgive the loan later.

At the time Wiederhorn hired former Clinton aide Lanny Davis, a lawyer and publicity spin specialist to push the claim he was being victimized. Maybe that is why nobody ever hears about these things, if you have enough money you can make any story go away.

Anyway, it will be interesting to see if the SEC actually does anything, and if anyone ever hears about this story again. Wiederhorn resigned as CEO of FAT brands about a year ago, just before he did he borrowed 16 million from another one of his companies, following which FAT Brands board of directors agreed the company would fund the loans and later, to forgive the loan entirely. Wiederhorn is no longer CEO of FAT brands but is still a board member and controlling shareholder, as well as an outside consultant and strategic advisor to the restaurant company.

@FranchiseCityOnline