Talk about a scam.
Back in the go-go '90s, a hotshot named Andrew Wiederhorn (above) got into the "distressed loan" business--buying up bad debts and convincing deadbeats to pay up. Through a series of questionable deals, Wiederhorn managed to parlay this unlikely source of revenue into a $140 million fortune under the umbrella of Wilshire Financial Services Group. Then, in 1999, Wilshire collapsed.
Last week, Wiederhorn pleaded guilty in U.S. District Court to two felonies--paying an illegal gratuity to local money manager Jeff Grayson and filing a false tax return. He was sentenced to 18 months in jail and ordered to pay $2 million in restitution and a $25,000 fine.
Then the other shoe dropped. Turns out that Wiederhorn managed to engineer a deal in which his current company, Fog Cutter Capital Group, granted him a leave of absence, kept him on the company payroll at $350,000 a year--and handed him a bonus of $2 million.
Here at the Rogue Desk, we consider Wiederhorn one of the outstanding con artists of the decade. But he was aided and abetted by a cast of minor-league bozos, buffoons and bumblers who, we believe, deserve broader recognition:
There's Grayson, whose complex deals with Wiederhorn were first disclosed by WW in October 1998, and his son, Barclay, who covered up his dad's desperate financial position from rank-and-file union members who invested their retirement funds with them. There are the corrupt union officials who looked the other way while enjoying hunting and fishing expeditions on the Graysons' dime.
But most galling is the behavior of Fog Cutter's board of directors. In theory, the board of a publicly traded company is supposed to look after shareholders' interests. In fact, these six pinheads gave Wiederhorn a platinum parachute. It didn't hurt that one of the directors, Donald Berchtold, is Wiederhorn's father-in-law. Another, University of Southern California business school prof David Dale-Johnson, was recently given a job at Fog Cutter. A third, Ray Mathis, is an ex-FBI official and former head of the Citizens Crime Commission, a local nonprofit whose 2003 awards ceremony was underwritten by--you guessed it--Fog Cutter. Paging Eliot Spitzer....