After three trials over the course of eight years, the former chairman of the Cendant Corp. was convicted on charges of spearheading a major accounting fraud.
When the fraud was discovered in 1998, it was one of the largest in history -- though soon to be replaced in the public consciousness by frauds at Enron and WorldCom.
Walter Forbes, 63, was found guilty on a single count of conspiracy and two counts of submitting false reports to the Securities and Exchange Commission in overstating his company’s earnings by more than $250 million. He was acquitted on a fourth count, of securities fraud.
In Forbes’s previous trials, the jurors failed to reach a unanimous verdict despite lengthy deliberations. Heremains free on $1.2 million bail and will be sentenced on Jan. 17, facing as many as 25 years in prison.
Investors lost $19 billion when Cendant’s stock fell after the disclosure.
Prosecutors said Forbes 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 -- before the corporation merged with HFS Inc. in 1997 to form Cendant. Two months ago, Cendant stockholders changed the company’s name to the Avis Budget Group.
Forbes resigned from Cendant with a $47 million severance package, shortly after the corporation settled a 2000 civil case for $2.9 billion, with Ernst & Young chipping in an additional $335 million.
