The Justice Department has decided to drop its case against Fat Brands and its chairman Andy Wiederhorn, ending a federal prosecution that began in May 2024. Wiederhorn and the restaurant company, known for owning Fatburger, Johnny Rockets, and Great American Cookies, were previously indicted by a federal grand jury in Los Angeles on multiple charges including wire fraud and tax evasion. Prosecutors alleged that Wiederhorn orchestrated a fraudulent loan scheme that generated $47 million in illicit gains.
On Tuesday, federal prosecutors filed a motion to dismiss all charges against Wiederhorn, two other individuals, and the company. Wiederhorn has consistently denied any wrongdoing since the indictment. Notably, he had a previous conviction nearly twenty years ago for filing a false tax return and providing an illegal gratuity, which resulted in over a year of federal prison time.
With the dismissal, Wiederhorn expressed optimism about moving forward. “With this indictment behind us, I look forward to focusing on the continued growth and success of FAT Brands,” he said in a statement. He stepped down as CEO of Fat Brands in 2023 amid disclosures that the U.S. Securities and Exchange Commission (SEC) was investigating him. While the criminal charges have been dropped, the company and Wiederhorn are still facing an unresolved civil complaint from the SEC related to the same allegations that triggered the Justice Department’s case.
Additionally, prosecutors requested the court to drop separate criminal charges accusing Wiederhorn of being a felon in possession of a firearm and ammunition. The DOJ’s reversal follows significant changes within the department after President Donald Trump began his second term. In March, Adam Schleifer, the assistant U.S. attorney leading the prosecution in Los Angeles, was fired and later claimed his dismissal was part of a smear campaign orchestrated by Wiederhorn.
Despite these internal changes, DOJ officials in California had previously indicated that the prosecution would continue. Interestingly, Fat Brands had donated $100,000 to Trump’s inauguration fund months before the charges were dropped.
Following the news of the dropped charges, Fat Brands’ shares rose by 7% in Wednesday morning trading. The company’s stock currently has a market capitalization of less than $43 million.
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