Former Cendant chairman Walter Forbes was sentenced to 12 years and seven months in prison and ordered to pay $3.275 billion in restitution for orchestrating the largest accounting fraud of the pre-Enron era.
Forbes was accused of inflating earnings by $252 million at CUC International, where he was chief executive officer, and which merged with HFS in 1997 to form Cendant. When the fraud came to light, the company’s market capitalization plunged by $14 billion in one day. Bloomberg pointed out that Cendant and its auditors, Ernst & Young, paid a then-record $3.34 billion to settle investor lawsuits.
After two mistrials, Forbes was convicted by a federal jury last October of conspiracy to commit securities fraud and two counts of making false statements, reported the Associated Press; he was found not guilty of securities fraud.
Forbes, 64, who faced up to 15 years and 8 months in prison, had asked for leniency based on his age and charity work, according to the AP. The 12-year, 7-month sentence is the minimum under federal guidelines, the wire service noted.
In August 2005, former Cendant vice chairman E. Kirk Shelton was sentenced to 10 years in prison and ordered to pay the company $3.28 billion in restitution for his role in the accounting scandal.