After seven months of trial in Hartford, the fraud case against two former Cendant executives has been delivered to a federal jury. Almost seven years ago, Cendant discovered a $500 million accounting fraud, which has since been dwarfed by Enron and WorldCom. Walter Forbes, Cendant's former chairman, and E. Kirk Shelton, the former vice chairman, face charges of securities fraud, wire fraud, and conspiracy in connection with a scheme to inflate the revenues and earnings of CUC International, a company that was acquired by Cendant.
Since the fraud was uncovered, Cendant has paid $2.85 billion to settle its shareholder lawsuits. Once the verdict is returned in the criminal proceeding, Cendant will likely proceed against its former auditors, Ernst & Young. Ernst & Young paid $335 million to settle a Cendant shareholder lawsuit in 2000.
Posted by franchiselawblog at December 14, 2004 06:08 PM