A second, streamlined case against the former chairman of Cendant Corp. produced the same result as the first -- a mistrial.
A federal judge declared a mistrial in the fraud trial of Walter Forbes, whose company made headlines in the 1990s. Forbes was accused of participating in a scheme that cost the company and investors more than $3 billion, which was the largest case of accounting fraud in the country at the time.
In Forbes' first trial, when he faced 16 charges, a hung jury was declared in January 2005 after 33 days of deliberations. The jury in the second trial deliberated for 27 days.
In the second trial, federal prosecutors reduced the number of charges against Forbes to four, including conspiracy to commit securities fraud, securities fraud and two counts of false reporting to the Securities and Exchange Commission.
Forbes, 63, has said he was unaware of the fraud and left the accounting to the company's accountants and Ernst & Young auditorsCendant vice chairman E. Kirk Shelton was convicted of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the SEC last year and was sentenced to serve 10 years in prison. He was ordered to pay $3.27 billion in restitution to Cendant, including a balloon payment of $15 million and monthly installments of $2,000 after he is released from prison.
Prosecutors said Forbes collected more than $100 million in pay from the company after he inflated revenue by $500 million at Cendant's predessor, CUC International. He also received a $47.5-million severance package when he left Cendant in 1998. The fraud was reported the same year, causing Cendant's market value to drop by $14 billion in a day.
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