The former vice chairman of Cendant Corp. was sentenced to 10 years in prison and ordered to pay $3.27 billion to the hotel franchise and travel company for his role in an accounting scandal at Cendant's predecessor, CUC International.
E. Kirk Shelton was ordered to make an initial payment of $15 million by this fall, and to continue making monthly payments of $2,000 once he is released from prison.
In 1998, CUC International announced that revenues had been inflated by $500 million, causing the company's value to drop by billions within a day. Prosecutors said that Shelton was behind the revenue scam, intending to drive up the company's stock price.
Shelton was found guilty in January on a dozen counts of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the Securities and Exchange Commission. At the time the accounting scheme was made public, the $3 billion fraud was the largest case of accounting fraud in the country.
The additional $270 million covers the amount Cendant spent in settling shareholder suits and conduct financial audits.The company's former chairman, Walker Forbes, was also put on trial with Shelton, but the jury was unable to reach a verdict on 16 similar fraud and conspiracy counts. His new trial is set to begin in September.
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