Risk & Compliance

Ex-Cendant Controller Settles with SEC

Nearly a decade after Cendant ushered in an era of large corporate frauds, ex-controller Anne Pember settles with the SEC.
Alan RappeportApril 25, 2007

The Securities and Exchange Commission settled its fraud case against the ex-controller of Cendant on Wednesday.

Anne Pember, formerly controller with CUC International, which merged with HFS Inc. to form Cendant in December 1997, will have to pay $100,000 and is prohibited from serving as an officer or director of a public company. Pember pleaded guilty to fraud in 2000, and was sentenced earlier this year to two years of probation and 200 hours of community service.

The Commission took action against Pember for her role in a scheme to add hundreds of millions of dollars to the reported operating income of CUC, which later became Cendant and is now Avis Budget Group Inc.

The terms of the settlement require Pember to cancel all of her existing stock options and prohibit her from appearing before the SEC as an accountant.

The Commission noted that a U.S. District Judge said Pember had been cooperative in the government prosecution of former Cendant chairman Walter Forbes and former vice-chairman E. Kirk Shelton. After two mistrials, Forbes was sentenced to 12 years and seven months in prison, while Shelton was sentenced to 10 years in prison.

Pember faced up to five years, but her cooperation helped her avoid prison. Former CFO Cosmo Corigliano and Casper Sabatino, the CUC accountant in charge of external reporting, also avoided prison time after cooperating with authorities.

Authorities had charged that company executives used improper accounting methods to inflate CUC’s stock value by $500 million. When the fraud became public in 1998 it was said to have cost the company and its investors $3 billion.