Ex-Cendant chairman gets 12 1/2-year term

BRIDGEPORT, Conn. -- Former Cendant Corp. chairman Walter Forbes was sentenced to 12 years and seven months in prison and ordered to pay $3.28 billion in restitution for leading the largest accounting fraud of the 1990s.

U S District Judge Alan Nevas sentenced Forbes, 64, for inflating income by $252 million at CUC International Inc. CUC merged with HFS Inc. in 1997 to create Cendant, a travel and real estate company. Forbes, CUC's chief executive, was convicted Oct. 31 of conspiracy and false reporting about company finances. His conviction came after two mistrials. Sentencing came during a hearing yesterday in Bridgeport, Conn.

Cendant and its auditors, Ernst & Young, paid $3.34 billion to settle investor lawsuits and will divide restitution. Forbes, who testified he was worth $200 million in 1997, claimed he couldn't afford a fine because he has a negative net worth. The judge waived any fine.

Forbes didn't speak during the hearing and showed no reaction to the sentence. He later hugged his wife, Caren. He declined to comment as he left court.

Nevas said he will decide whether Forbes can stay free on $1.2 million bail as he appeals. His attorney, Brendan Sullivan, declined to comment.

Jurors convicted Forbes of conspiracy and two counts of false reporting to the U S Securities and Exchange Commission.

"We're very pleased with the sentence," U S Attorney Christopher Christie said yesterday. "The public has waited many years for Walter Forbes to be brought to justice, and today that's exactly what happened. We feel that we've done our job."

Former CUC president E. Kirk Shelton was convicted at the first trial, sentenced to 10 years, and ordered to pay Cendant $3.28 billion.

Forbes testified at trial that he was a visionary who was ignorant of company finances and operations, a defense that jurors said they rejected.