E. Kirk Shelton, a former vice chairman of Cendant Corp., was sentenced to 10 years in prison for his role in an accounting scandal during the 1990s that cost investors more than $3 billion, according to the Associated Press.
He was also ordered to pay $3.27 billion to Cendant, the travel company that owns the Avis and Budget car-rental companies. U.S. District Judge Alvin Thompson in Hartford ordered Shelton to pay $15 million by October and then make monthly payments of $2,000 after he leaves prison, according to the wire service. Prosecutors said that the $3.27 billion would cover Cendant’s shareholder litigation costs, legal fees, and the cost of conducting various financial audits, according to AP.
In January, Shelton was convicted of 12 counts of conspiracy, mail fraud, wire fraud, securities fraud, and making false statements to the Securities and Exchange Commission, the wire service noted.
Cendant’s accounting fraud was the largest before Enron and WorldCom. Prosecutors charged Shelton with inflating revenues by $500 million at Cendant’s predecessor company, CUC International, in an effort to boost the company’s share price. When the fraud came to light, Cendant’s market capitalization plunged by $14 billion in one day, according to the AP.
The AP reported that Shelton’s lawyer, Thomas Puccio, said Shelton would appeal the sentencing. He argued that Shelton did not directly benefit from the scheme. Shelton must surrender to the U.S. Bureau of Prisons by September 2, according to the report.