When The Penny Drops

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When The Penny Drops

10 years after millionaireAndy Wiederhorn served time on federal charges, the Fatburger CEO talks about rebuilding his life from the bottom up - simply because the alternative "wasn't an option"


Karen Ann Monsy

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Published: Fri 1 May 2015, 11:59 AM

Last updated: Sun 26 Jul 2015, 4:35 PM

He's gone from being a 20-something millionaire to serving time in federal prison and then fighting his way back up to the top with an empire of his own - the Fatburger fast food chain. Andy Wiederhorn is not 50 yet, but one suspects he's seen enough 'excitement' (for want of a better word) in his life so far to offer a few pearls of wisdom we'd do well not to ignore. So, when the businessman stopped by Dubai last month to announce expansion plans for the well-loved burger brand, wknd. caught up with him for a chat about. life - especially when it knocks you to the ground.

A financier from Portland, Oregon, Wiederhorn began his career by organising a group of investors to purchase debt and real estate from failed US banks in the early 1990s. The company was called Wilshire Financial Services Group - and its founder was fresh out of business school; just 21 years old. By the time the young entrepreneur was 26, he'd already accumulated over $300 million of investments in these assets; at 28, he'd purchased two failing banks in California and, a few years later, set up another investment firm called Fog Cutter Capital Group. He was now 32 and worth an estimated $140 million. Wiederhorn supposes losing his father at a young age was what made him "grow up pretty quick and learn to assume responsibility early".
It was a rise so meteoric few could compare - but it also meant that the Wall Street trader's fall was just as great when his empire crumbled over the next few years, starting with the global financial crisis of 1998. Wilshire spiralled into bankruptcy, but the biggest blow came when Wiederhorn was accused of being at the centre of a $350 million Ponzi scheme that federal officials called the largest union pension fraud in US history.

The former investment analyst pled guilty in 2004 and served 15 months in federal prison - a period he could well consider the lowest point in his life - but more than 10 years on, still denies having any knowledge of the scheme. "For sure, it was a nightmare," he says. "I carefully followed some legal advice from top lawyers, which turned out to be wrong, according to the government. They prosecuted me for it, despite my reliance on the advice. However, settling was the only way to put the fight behind me, after six years of arguing with them."
That experience changed him as a person. "Prison certainly isn't a nice place to be," he reflects. "I became stronger - mentally - learning how to manage stressful situations that you simply can't change. I learnt that when you get knocked down on the canvas, you have to pick yourself up and get back in the ring - because the alternative isn't an option."
It also taught him a thing or two about second chances. "Fool me once, shame on you; fool me twice, shame on me," he cites.  "People learn from their mistakes, whether it's their fault or not. In my case, it was relying on some bad legal advice. Either way it happened. One needs to understand that the mistakes people may have made in the past are not 100 per cent indicative of decisions or actions they will take in the future. Why would they be? I think if you consider how you would want to be treated if you were in this position (either stemming from bad judgment or bad circumstances), you quickly come to the decision that giving others a second chance is the only logical outcome."
Getting out a year later, however, Wiederhorn found himself something of a persona non grata. "Society was very judgmental," he rues. "But my family was supportive and the business colleagues that knew me stood by me as well. It was a long process [to work my way back up to the top]. I had to come to terms with the fact that I couldn't change what had happened in my life, and I needed to build on it by going in a direction that I could influence without relying on other people to judge me. This was a new approach for me, but it was one that worked in the end."
Well, the top of his game is certainly where the chief executive is sitting now. Wiederhorn bought the Fatburger chain in 2003, when the company was floundering with about 40 restaurants in the USA. Today, there are more than 200 outlets open, with 350 more under contract to be built in 32 countries around the world. "It took me a while to realise that converting the business to a pure franchise model was the best way to manage risk, scale the company and focus on one goal - growth," he explains.
His advice to entrepreneurs comes across as simple, if not a little odd. "Most entrepreneurs shouldn't be in the business of trying it alone," he says, frankly. "It is an overrated, thankless job, with a low success rate. Working for someone else may be a much more rewarding experience, with much less stress." If, however, you insist on running your own show, he says: "Raise your capital properly, focus on measureable results, and be prepared to pivot your direction swiftly." Either way, he adds, it is important for owners and employees to both remember to recognise the other's efforts for a healthy working environment - something he learnt during his 2013 stint on Undercover Boss, a TV show that features senior executives working in disguise in their own organisations to find out how their operations really run.
As a father of six, does he have a word of advice on managing work-life balance as well? "I learned to leave my problems at the office," he says, sagely. "They were always there the next morning."

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