NEWARK, NJ The Wall Street Journal reported that a federal grand jury here indicted the former chairman of Cendant Corp., Walter Forbes, and the former vice chairman, E. Kirk Shelton, on criminal charges of accounting fraud. The two men are accused of inflating the company s franchising and marketing earnings by several hundred million dollars.
Forbes and Shelton were the highest-ranking executives of CUC International, which merged with HFS to create Cendant in 1997. Federal prosecutors said the scheme allowed CUC to artificially inflate its stock price in order to acquire other companies and make itself attractive to merger partners, including HFS. Federal officials also alleged that the two men profited from the fraud by selling millions of dollars of the companys stock.
Both Forbes and Shelton have released statements through their attorneys stating their innocence. (3/1/01)
SOURCE: The Wall Street Journal