3 Former Cendant Execs Plead Guilty in Scheme That Defrauded Investors

Three former executives of Cendant Corp., operator of hotel, car rental and real estate franchises, pleaded guilty Wednesday to an accounting fraud described by U.S. prosecutors as one of the largest against public investors, resulting in billions of dollars in losses.

The senior financial officials of CUC International, which merged with HFS Inc. in 1997 to create Cendant, face a maximum jail term of five years on each of the wire fraud and mail fraud charges when they are sentenced Sept. 12 in U.S. District Court in Newark, N.J.

They also face a maximum fine of $250,000, twice the gross amount of any gains that were derived or twice the gross amount of any loss suffered by shareholders.

Former Chief Financial Officer Cosmo Corigliano, 40; former Controller Anne Pember, 40; and former Vice President for Accounting and Financial Reporting Casper Sabatino, 47, entered pleas before U.S. District Judge William Wells.

Cendant has cooperated with federal prosecutors since they began their probe in mid-1998.

Federal prosecutors said the three executives had admitted conspiring to inflate CUC International earnings and projected earnings. The company then used the artificially inflated stock to buy other companies and to make CUC a more attractive merger partner.