Hartford, Conn. – Federal prosecutors are hoping that a third jury will be able to reach a verdict in the case of former Cendant Corp. chairman Walter Forbes, accused in a massive fraud scheme that cost the company and investors more than $3 billion.
A verdict could end what was among the first in a series of corporate accounting scandals that sparked outrage from investors in recent years. The latest trial was expected to begin today before U.S. District Judge Alan Nevas in Bridgeport.
Prosecutors say Forbes participated in a scheme to inflate the stock of Cendant’s predecessor, CUC International, by $500 million. The fraud was reported in 1998, causing Cendant’s market value to drop by $14 billion in one day.
Forbes has argued he knew nothing about the fraud. His co-defendant, former Cendant vice chairman E. Kirk Shelton, was convicted last year of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the SEC.
Shelton was sentenced to 10 years in prison and ordered to pay $3.27 billion restitution to the company, which stockholders last month renamed Avis Budget Group. The restitution order includes a balloon payment of $15 million and monthly installments of $2,000 after he is released from prison.
