(Bloomberg) - Jordan Chirico, a former portfolio manager at a Jefferies Financial Group hedge fund, has left restaurant chain FAT Brands Inc. after about two weeks on the job as he faces fraud allegations tied to his previous role.
Chirico stepped down as head of debt capital markets to focus on his defense in the litigation brought forward by 352 Capital, a Jefferies fund, according to a FAT Brands spokesperson. He had joined the restaurant chain in early July to work on the company’s balance sheet. He has no replacement at this time, a representative said in an emailed statement.
The exit comes after fund 352 sued Chirico claiming he orchestrated an investment of more than $100 million in a Ponzi-like scam. According to the suit, Chirico directed the purchase of a large quantity of bonds issued by a company that claimed to operate thousands of filtered water vending machines. The suit alleges Chirico knew these machines didn’t exist but used 352’s money to help fund the company, in part to recoup his own investment.
Chirico’s lawyer Bob Gage didn’t immediately respond to a request for comment. The water machine company, Water Station Management, and several people associated with it, including founder Ryan Wear, were also sued by 352.
Jefferies has been working on winding down trading positions at the hedge fund, which focused on asset-backed bonds, Bloomberg reported. The firm has already sold some bonds tied to Seattle-headquartered Centerline Logistics Corp., a company that refuels ships and provides other marine transport services.
Other 352 assets include bonds tied to FAT Brands, which owns restaurant brands like Fatburger, Johnny Rockets, and Twin Peaks. The business has been looking to refinance at least one of its outstanding bonds, known as a whole business securitization.
FAT Brands is facing its own legal entanglements. The Securities and Exchange Commission filed fraud charges against the chain’s founder Andrew Wiederhorn and two ex-chief financial officers concerning the company’s disclosures about related-person transactions with Wiederhorn and his family, Bloomberg reported in May. The complaint alleges that, from October 2017 through March 2021, Wiederhorn used almost $27 million of FAT’s cash on his personal expenses. In a statement at the time, FAT Brand’s counsel described the charges as “unprecedented, unwarranted, unsubstantiated, and unjust.”
Chirico became portfolio manager of Leucadia’s 352 fund in 2020. He previously worked at investment banks including Credit Suisse and Bank of America as well as Brigade Capital Management, according to his LinkedIn profile.
By Carmen Arroyo
