Ex-Cendant Executive Convicted
A former top executive at Cendant Corp. was convicted Tuesday of fraud and other charges, but jurors could not reach a decision about the role of another executive in the case.
E. Kirk Shelton, the company’s former vice chairman, was convicted of 12 counts, including conspiracy, mail fraud, wire fraud and securities fraud.
U.S. District Judge Alvin Thompson declared a mistrial for former Cendant Chairman Walter Forbes after jurors in Hartford, Conn., said they were unable to reach a verdict on 16 counts after weighing the charges for 33 days.
Shelton, 49, faces as much as 40 years in prison. Thompson set March 24 as the sentencing date. Shelton remains free on a $1-million bond.
Shelton and Forbes declined to comment after the trial, as did their lawyers.
Shelton and Forbes were accused of inflating revenue by $500 million at Cendant’s predecessor, CUC International, to drive up the stock price. The fraud, which was reported in 1998, caused CUC’s market value to drop by $14 billion in one day. Cendant was forced to restate $571 million of CUC income and pay $3.2 billion in cash and stock to resolve investor lawsuits.
“This is a case about making up the numbers and lying about the earnings,” Assistant U.S. Atty. John Carney told jurors in October in summarizing a trial that began May 10.
On Tuesday Carney declined to comment on the mistrial. Michael Drewniak, a spokesman for U.S. Atty. Christopher Christie in Newark, N.J. -- whose office brought the case -- declined to say if prosecutors would pursue charges against Forbes again.
Forbes and Shelton had pleaded not guilty to charges of conspiracy, securities fraud, mail fraud, wire fraud and lying to the Securities and Exchange Commission.
New York-based Cendant, whose brands include Days Inn hotels, Avis rental cars and Century 21 real estate brokerages, settled shareholder lawsuits over the fraud in 2000.
Shelton and Forbes said they had no knowledge of the phony accounting and blamed Cosmo Corigliano, CUC’s former finance chief, who pleaded guilty and testified for 18 days as a government witness. Forbes and Shelton also said they relied on CUC’s accountants and auditors at Ernst & Young for accurate financial statements.
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Associated Press and Bloomberg News were used in compiling this report.
