Ex-Cendant Chairman Sentenced, Ordered to Pay $3.3 Billion
Former Cendant Chairman Walter Forbes was sentenced on Wednesday to 12 years and seven months in prison and ordered to pay $3.3 billion for one of corporate Americas's biggest accounting scandals.
Prosecutors said Forbes and former Vice Chairman Kirk Shelton oversaw a decade-long accounting scheme that overstated income at Cendant, a travel and real estate company now known as Avis Budget Group, and at predecessor company CUC International.
U.S. District Judge Alan Nevas in Bridgeport, Connecticut called the restitution "a reasonable estimate of the victims' losses" but he did not say how Forbes would be expected to pay such a large sum.
Forbes, 64, was convicted in October on one count of conspiracy and two counts of false reporting after two previous mistrials for his role in the accounting irregularities.
Cendant's stock market value sank about $14 billion in one day after the fraud was disclosed in 1998. It was one of a series of accounting scandals that rocked Corporate America, and led to a settlement with investors worth $2.85 billion.
When the judge handed down the sentence, Forbes sat hunched forward, expressionless. He did not comment at the court hearing.
He was given a harsher punishment than Shelton, who was sentenced to 10 years in prison in August 2005 for his role in the fraud. Shelton also was ordered to pay $3.3 billion in restitution.
Under federal sentencing guidelines, Forbes faced as much as 15 years in prison. His lawyers had asked for a sentence of no more than 10 years, citing his "long history of good conduct" and his age.
But the judge said that Forbes' $2.5 million in charitable giving over a period of years was only "modest" for someone with net worth of about $200 million in late 1997.
Cendant was based in New York, but the trial took place in Connecticut because CUC was based in Stamford at the time of the fraud.