Los Angeles, CA, October 13, 2025
News Summary
Federal prosecutors have indicted Fat Brands, the parent company of Fazoli’s, along with three executives including former CEO Andrew Wiederhorn, on felony charges connected to a $47 million sham loan scheme. The investigation, led by the SEC, FBI, and IRS, claims that Wiederhorn engaged in fraud to deceive shareholders and evade taxes. Following the indictment, the company’s stock plummeted by 25%. Fat Brands has denied the allegations and plans to vigorously contest the charges.
Los Angeles, CA – Federal prosecutors in Los Angeles have indicted Fat Brands, the parent company of Fazoli’s, on felony charges related to a $47 million “sham loan” scheme that allegedly defrauded shareholders. The indictment also names three individuals linked to the company, including former CEO Andrew Wiederhorn.
Fat Brands, a publicly traded company, acquired Fazoli’s in November 2021. Known for its affordable Italian dishes and famous for free breadsticks, Fazoli’s operates its headquarters on Palumbo Drive in Lexington, Kentucky. With a portfolio that also includes brands such as Fatburger, Johnny Rockets, and Ponderosa and Bonanza Steakhouses, Fat Brands has quickly expanded since its formation.
The Securities and Exchange Commission (SEC) has initiated a civil enforcement action against Fat Brands and several executives involved. Concurrently, the FBI and the IRS Criminal Investigation are conducting investigations regarding the company’s activities and the alleged fraudulent scheme.
Following the announcement of the fraud allegations, Fat Brands’ stock shares experienced a significant decline, plummeting by approximately 25%. The indictment claims that Wiederhorn engaged in a long-running plot to deceive investors and evade taxes, with the knowledge and assistance of the company’s CFO and an external accountant, both of whom are also facing charges.
Wiederhorn, who is currently the board chair of Fat Brands, is accused of utilizing company funds for extravagant personal expenses, including private jet travel, lavish vacations, and luxury vehicles like a Rolls Royce Phantom. Furthermore, it is reported that he received close to $47 million in loans from the company, intended for personal use, which he never intended to repay nor reported as taxable income. Between 2010 and early 2021, Wiederhorn allegedly concealed these funds and further exacerbated the situation by using company accounts to pay for personal credit card debts.
United States Attorney Martin Estrada characterized the actions of Wiederhorn as deceptive and unethical, emphasizing the long-standing nature of the fraudulent scheme directed at investors and the United States Treasury.
In response to the serious allegations and the indictment, Fat Brands has asserted that the accusations are baseless. Attorney Thomas Zaccaro contended that the claims arise from conduct that ceased over three years ago and fail to acknowledge the company’s cooperation during the investigation. Fat Brands has expressed its commitment to vigorously contest the charges in the hopes of achieving a fair resolution.
Investors who believe they may have fallen victim to the alleged fraudulent activities are encouraged to seek additional information through designated channels provided by the Department of Justice.
Background on Fazoli’s
Founded in 1988 under the name Gratzi’s, Fazoli’s has become a popular dining option for customers looking for Italian cuisine at affordable prices. Over the years, the restaurant has garnered a loyal customer base, marked by its signature offering of free breadsticks with every meal. The company continues to operate with a commitment to providing quality food and dining experiences.
Ongoing Investigations
The continuous investigations by federal agencies and regulatory bodies reflect the seriousness of the allegations and the potential implications for the company and its leadership. Both the SEC and criminal investigations will play a crucial role in determining accountability and consequences for the parties involved.
Impact on Investors
The plunge in stock prices following the fraud allegations raises significant concerns for investors regarding their financial interests in Fat Brands. Shareholders are encouraged to closely monitor updates from the ongoing judicial and administrative proceedings to assess the potential impact on their investments.
Frequently Asked Questions
What is the recent indictment against Fat Brands about?
Federal prosecutors have indicted Fat Brands and three of its executives on charges related to a $47 million sham loan scheme, which allegedly defrauded shareholders.
Who are the key figures involved in the indictment?
The indictment charges former CEO Andrew Wiederhorn, the CFO of Fat Brands, and an outside accountant involved in the alleged fraudulent activities.
What were the financial implications for Fat Brands following the fraud allegations?
Following the announcement of the fraud allegations, Fat Brands’ stock shares dropped by approximately 25%, raising concerns among investors.
How has Fat Brands responded to these allegations?
Fat Brands has claimed that the accusations are unjust and asserts it has cooperated with investigators, planning to vigorously defend against the charges.
Summary of Key Features
| Feature | Description |
|---|---|
| Indictment | Fat Brands and executives are indicted for a $47 million sham loan scheme. |
| Key Individuals | Former CEO Andrew Wiederhorn, CFO, and outside accountant charged. |
| Stock Impact | Fat Brands stock dropped by around 25% following allegations. |
| Company’s Response | Fat Brands claims accusations are unjust and will defend vigorously. |
| Background | Fazoli’s is known for affordable Italian cuisine, headquartered in Kentucky. |
Deeper Dive: News & Info About This Topic
HERE Resources
Additional Resources
- Kentucky.com: Fazoli’s Update
- Wikipedia: Fazoli’s
- Franchise Times: Fat Brands Acquisition
- Google Search: Fat Brands
- Fox56 News: Federal Prosecutors Indict Fat Brands
- Google Scholar: Fat Brands Indictment
- Restaurant Business Online: Fat Brands Completes Purchase
- Encyclopedia Britannica: Fazoli’s
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