Industry News

Former Cendant Chairman Forbes found guilty of conspiracy

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After deadlocks in two previous trials, a jury this week found Walter A. Forbes, 63, guilty of conspiracy to commit securities fraud and making false statements in a massive fraud in 1999 that threatened travel and real estate company Cendant Corp. soon after its creation. Cendant was created in December 1997 through a merger of membership-based consumer services company CUC International and HFS Inc., a travel and real estate services company. Cendant officials announced accounting problems in 1998, stating that "a 'widespread and systemic' fraud had occurred at the merged company that included improperly recognizing fictitious revenues, falsely coding services sold to customers and fraudulently manipulating merger reserves," according to court documents. A report adopted by Cendant's board of directors found that CUC officials had inflated that company's operating income by about $500 million from May 1995 to August 1998, court documents state. The financial fallout was severe -- the...