The CEO of restaurant chains Fatburger, Round Table Pizza and Johnny Rockets has been under federal investigation for tax evasion. Agents raided the home of his daughter-in-law, whose mother is “Real Housewives of Beverly Hills” star Kim Richards (his son and daughter’s wedding was a plot line in the Bravo show).
The government believes that FAT Brands has been paying for his family’s lifestyle improperly,
The affidavit identifies years of credit card purchases by Wiederhorn, his children, and other relatives — $183,500 at a London jeweler; $150,000 apparently for a down payment on a Rolls-Royce; more than $100,000 to a Beverly Hills divorce attorney — and alleges they were “paid primarily” out of accounts held by an affiliate of the publicly traded FAT Brands.
But that’s not the interesting thing. According to a court filing, the government calims he “generated millions of American Express rewards points by routing company money through his son’s PayPal account.”
[His son] Thayer Wiederhorn, an executive at FAT Brands, is referenced specifically in connection with an alleged scheme to route millions of dollars of company money through American Express charges to a PayPal account bearing his name. The FBI agent suggests the apparent goal was to generate credit card rewards points for his father.
The court records describe the scheme as “round-trip transactions,” with money traveling from the younger Wiederhorn’s PayPal account, to his personal Bank of America accounts, and back to FAT or its subsidiaries.
The primary issue here is millions of dollars of funds spent on company credit cards for personal use (and purchases for family members, who apparently held company credit cards even when not employed by the company).
However, it seems, they were also generating points using company funds by earning Membership Rewards with credit card spend – father sends money to the son using Paypal, son sends the money back to the company. In all they sent $9 million this was, presumably earning 9 million Membership Rewards points at a cost in Paypal fees of $250,000. Paying 2.8 cents apiece for Membership Rewards points is, in fact, criminal.
(HT: J)
When you factor in the tax “savings”, it’s a lot less than 2.8 CPM.
When you factor in the cost of having to pay for a defense against a federal prosecution, it seems like this could turn out to be a lot more expensive than 2.8 cents per Amex point.
When it isn’t your money, it’s $0.00 cpm.
Will FAT shareholders get Amex MR points as restitution?
I worked for public company where two executives were earning up to 3 million Amex points annually on company expenses – mind you, not their travel expenses, but where the company’s expenditure can be paid with a credit card. It was unclear how the points were used. This was reported to the CEO and the BOD, and the practice was promptly stopped.
Great last line, Gary
Sounds like a very inefficient and ripoff form of “manufactured spending” wasn’t a good deal lol
I guess no one told them about Schwab
Real housewives and bravo…say no more
If. This entire family dies tomorrow with pain and suffering I will be the first to celebrate
Human garbagge
Things that would be bad investment with your own money can be even worse when you use somebody else’s money.
Felons by Bravo
I think I may have met the guy before @ The Hyatt Regency LAX pre pandemic he was hitting on a number of ladies in the club lounge and was pretty drunk but left with a woman he was hooking up with who also had one too many.Think he was married too
We had discussions on Fatburger earlier in the evening I was unaware they had other well known brands as our conversations were focused on Fatburger
He was owner or CEO that much I remember
We also discussed earning points in the WOH program
The thing I also remember was how he probably made a good living yet stiffed the lounge staff with no gratuities.Kind of obnoxious ( Likely the alcohol)
I miss the club lounge there and the hotel doesn’t seem the same anymore since the club closed.Hope the team is doing well.
Greed is not good…..
I still have fond memories of the original Fatburgers at the corner of La Cienega an San Vicente in Beverly Hills.
Fond memories of visiting Fatburger Venice Beach (and BH) at the conclusion of a night out. Also the subject of several scenes in Less Than Zero.
This is not the first BH spouse under investigation:
https://www.nbcnews.com/pop-culture/celebrity/erika-jayne-accused-aiding-abetting-tom-girardi-21-million-lawsuit-rcna16882
There weren’t any red flags raised by Amex?
Kim Richards starred in Escape to Witch Mountain in 1975.
Just a small fry but did work at two jobs where I got tips. The policies of both management don’t declare your tips. If others at the workplace don’t declare tips, why burn others. However, the IRS came into one hotel, figured who was underreporting and sent out taxes are due letters.