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Former Cendant Chairman Sentenced For Fraud

Jan 18, 2007, 5:00 AM
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Former Cendant Corp. Chairman Walter Forbes was sentenced yesterday to 12 years and seven months in prison and ordered to pay $3.275 billion in restitution for leading the largest accounting fraud of the 1990s. In October, a jury found Forbes guilty of conspiracy to commit securities fraud and two counts of making false statements in a massive fraud scheme that cost the travel and real estate company and its investors more than $3 billion. He was found not guilty of a fourth count, securities fraud.

Prosecutors say that Forbes participated in a scheme to inflate the stock of Cendant's predecessor, CUC International, by $500 million. The fraud was reported in 1998, causing Cendant's market value to drop by $14 billion in one day. Prosecutors said Wednesday that there were 119,000 victims.

Forbes, who testified during the trial, has argued he knew nothing about the fraud. Forbes was CEO of CUC before the membership marketing operation merged with travel and real-estate services company HFS Inc. to form New York-based Cendant in December 1997.

Cendant's brands included Ramada, Howard Johnson, Avis, Coldwell Banker and Century 21.

In September, Cendant stockholders changed the company's name to Avis Budget Group to reflect its Avis and Budget vehicle rental brands. Its real estate and hotel businesses were spun off as stand-alone companies and the company sold its travel distribution operations.

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