Ex-Cendant execs hit with new charges
December 13, 2002
Investigation into Forbes, Shelton expanded
Inman News Features
Former Cendant Chairman Walter Forbes was indicted yesterday by a Bridgeport, Conn., federal grand jury for allegedly dumping $11 million in company stock shortly before the company disclosed accounting irregularities.
The indictment is the second time investigators have expanded their case since indicting Forbes and former EVP E. Kirk Shelton last year, according to NJ.com. Both men stand accused of conspiring to fraudulently inflate CUC Inc. earnings and cover up accounting problems, according to news reports.
Cendant Corp. was created in 1997 through the merger of HFS, which already owned the Century 21, Coldwell Banker and ERA real estate franchise chains, and marketing company CUC International.
Widespread fraud and accounting irregularities surfaced at CUC the following year while the company was being merged into the entity that became Cendant. An internal audit turned up "artificial and fictitious" revenues; false coding of services sold to customers and fabricated account receivables. After the audit, Cendant lowered its earnings results for 1997 by $0.28 per share or $392 million. The company also took a $457 million pre-tax adjustment to the charge associated with the CUC business taken on the date of the CUC merger with HFS, which had the effect of increasing net income for 1997 by $279 million or $0.032 per share.
Forbes, who was CUC's founder and then chairman of Cendant, resigned from his job along with nine company directors.
Copyright: Inman News Service