Wednesday, January 17, 2007
Former Cendant CEO Walter Forbes, convicted on conspiracy to commit securities fraud and false filing counts after two mistrials, received a twelve year, seven month prison term. Forbes was CEO of CUC before it merged with HFS in 1998 to form Cendant, and the revelation of significant accounting fraud at the company caused it to suffer substantial losses. According to an AP story (here), the Federal Sentencing Guidelines called for a sentence of twelve to fifteen years, and the court rejected Forbes' request for a downward departure based on his age (he's 64) and charitable contributions. The court also ordered Forbes to pay over $3 billion in restitution, although the money is not likely to be forthcoming any time soon.
The sentence is similar to those seen recently in other white collar prosecutions involving accounting fraud, including twelve years for former Computer Associates CEO Sanjay Kumar and fifteen years for former Homestore.Com CEO Stuart Wolff. E. Kirk Shelton, a former vice chairman of Cendant convicted at the first trial, received a ten-year sentence. Under the Bureau of Prisons rules, Forbes will serve a bit less than eleven years. He is currently free on $1.2 million bail, and the next issue will be whether the court permits him to remain free pending completion of his appeal. (ph)