Risk Management

Plea Deal Sets Stage for Cendant Testimony

Cosmo Corigliano, the former CFO of Cendant predecessor company CUC International, is expected to testify against former Cendant chairman Walter Fo...
Stephen TaubMay 18, 2004

A former top finance executive of CUC International Inc. has settled civil charges with the Securities and Exchange Commission for his role in the financial fraud committed at the predecessor company of Cendant Corp.

Cosmo Corigliano was controller of CUC from 1983 to 1995 and chief financial officer until the company’s December 1997 merger with HFS Inc. formed Cendant. The SEC charged that while he was controller, Corigliano helped senior CUC officers who initiated the company’s financial fraud, and that when he became CFO, he “orchestrated and refined the fraud.”

The commission also alleged that, as CFO, Corigliano “was responsible for keeping more senior CUC officers apprised about the progress of the scheme.” In addition, according to the SEC, Corigliano directed managers to make unsupported adjustments to CUC’s earnings in its quarterly and annual reports; signed financial reports filed with the commission; and made materially false statements to the company’s auditors.

Corigliano, who did not admit or deny the commission’s allegations, agreed to be permanently barred from serving as an officer or director of a public company. He and his wife also agreed to disgorge $14 million in cash, securities, retirement plans, and most funds held in trust for their children.

The settlement came as former Cendant chairman Walter Forbes and former vice chairman E. Kirk Shelton went on trial on charges of securities fraud, conspiracy, and lying to the SEC, according to The New York Times. Corigliano, who four years ago pleaded guilty to two counts of fraud, is expected to testify against Forbes and Shelton.

In 2000, Cendant agreed to shell out $2.85 billion to resolve civil complaints with shareholders. Ernst & Young also paid $335 million.