Fraud, Conspiracy Trial to Begin for Former Cendant Execs

NEW YORK -- The trial of former Cendant Corp. executives Walter A. Forbes and E. Kirk Shelton begins Monday, six years after Cendant found major accounting fraud in its CUC International division, The Wall Street Journal reported.

Forbes, former chairman of Cendant, and Shelton, former vice chairman, are charged with multiple counts of conspiracy, securities fraud, mail fraud, wire fraud and lying to the Securities and Exchange Commission. Forbes is also charged with insider trading for selling $11 million in Cendant stock a month before the company released the accounting news. The trial will be in U.S. District Court in Hartford, Conn.

Forbes was chief executive of CUC International Inc., a membership-marketing company that merged with HFS Inc., a travel and real-estate services company, in 1997 to create Cendant. Mr. Shelton was CUC's chief operating officer. Both have pleaded not guilty to the charges.

The 1998 discovery that CUC had inflated earnings by about $500 million over the course of several years led to the dismissal of Messrs. Forbes and Shelton and shaved $14 billion off once-highflying Cendant's market capitalization in one day. The stock, despite doubling in value during the past year, is still about 30 percent lower than it was before the company announced the fraud.

-- NYSCPA.org News Staff

Posted on 4/26/04