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High Court Rejects Cendant Fraud Appeal

By Greg Stohr
Bloomberg News
Tuesday, May 20, 2008

The Supreme Court rejected an appeal from Walter A. Forbes, the former Cendant chairman who is serving more than 12 years in prison for directing the largest accounting fraud of the 1990s.

Forbes, 65, was convicted in 2006 of conspiracy and making false statements to the Securities and Exchange Commission. The justices turned away his appeal without comment as part of a list of orders released yesterday.

Prosecutors blamed Forbes for overstating income by $252 million at CUC International, which merged with HFS in 1997 to create Cendant. Disclosure of the accounting irregularities caused Cendant's stock to plummet 46 percent in a single day in April 1998. The fraud cost shareholders $20 billion, the government said.

At the Supreme Court, Forbes argued unsuccessfully that he should have been allowed to argue that a government witness, former CUC financial-reporting manager Kevin T. Kearney, may have been offered immunity in exchange for his testimony.

Prosecutors said that Kearney was not offered immunity and that references to such an arrangement during two earlier trials were mistakes. The first two prosecutions ended in mistrials.

Cendant, a travel and real estate company, split into four companies, including Avis Budget Group.

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