Former Cendant Corp. chairman Walter Forbes was sentenced to 12 years and seven months in prison and ordered to pay $3.28 billion in restitution for heading up an accounting fraud.
Forbes, 64, was convicted in October 2006 on conspiracy and false reporting charges. Prosecutors said that he inflated the income at his own company, CUC International -- which had holdings including the Avis and Budget car rental companies and the Century 21 and Coldwell Banker real estate brokerage firms -- by more than $250 million before the corporation merged with HFS Inc. in 1997 to form Cendant.
The market value of Cendant fell $14 billion in 1998 when it disclosed the accounting irregularities and the company never recovered. Last year, stockholders changed the company’s name to the Avis Budget Group.
Cendant and its auditors, Ernst & Young, paid $3.34 billion to settle investor lawsuits and will divide Forbes’ restitution.
Former CUC president E. Kirk Shelton was convicted in January 2005 and later sentenced to 10 years and ordered to pay Cendant $3.28 billion.
Forbes has said that he relied on auditors at Ernst & Young when it came to finances, and accused CUC's former chief financial officer of falsely implicating him in the investigation.
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