BRIDGEPORT, Conn. - Former Cendant Corp. chairman Walter Forbes was sentenced yesterday to 12 years and seven months in prison and ordered to pay $3.275 billion in restitution for leading the 1990s' largest accounting fraud.
In October, a jury found Forbes guilty of conspiracy to commit securities fraud and two counts of making false statements in a massive fraud scheme that cost the travel and real estate company and its investors more than $3 billion. He was found not guilty of a fourth count, securities fraud.
The Cendant case was among the first in a series of corporate accounting scandals that sparked outrage from investors.
"We're very pleased with the result," said New Jersey U.S. Attorney Chris Christie, whose office prosecuted the case. "The public has waited many years for Walter Forbes to be brought to justice."
It was the latest long sentence handed down to a corporate executive convicted of corruption, experts said.
"It is justified and appropriate given the havoc he wreaked on the company and its shareholders," Christie said. "Like similarly long sentences imposed on other corporate figures, it sends the correct message that everyone in our society should be held accountable for criminal conduct."
Former Enron Corp. chief executive officer Jeffrey Skilling was sentenced to 24 years and four months in prison. WorldCom Inc. chief executive Bernard Ebbers received 25 years for his role in an $11 billion accounting fraud, and L. Dennis Kozlowski of Tyco International Ltd. received a sentence of 81/3 to 25 years in prison in another fraud case. Adelphia Communications Corp. founder John Rigas got 15 years for the fraud that drove his Coudersport, Pa., company into bankruptcy.
"The democratic will is what I really think it reflects," said Gregory J. Wallance, a former federal prosecutor who handled corruption cases. "These scandals inflict pain. It sparks a response."
Forbes was released yesterday on $1.2 million bond. No date was set for him to report to prison. His attorney, Brendan Sullivan, said Forbes intended to appeal. Sullivan and Forbes declined comment as they left U.S. District Court.
Prosecutors said they would oppose a defense request for Forbes to remain free on bail pending his appeal. But U.S. District Judge Alan H. Nevas agreed to a defense request to recommend that Forbes serve his time at a minimum-security federal prison camp in Otisville, N.Y.
The case was being tried after two previous juries deadlocked. This time, jurors reached the verdict after three days of deliberations.
Forbes faced a sentence of between 12 years and seven months and 15 years and eight months under federal guidelines. The 64-year-old New Canaan, Conn., resident asked for leniency based on his age and charity work.
Prosecutors said Forbes participated in a scheme to inflate the stock of Cendant's predecessor company, CUC International Inc., by $500 million. The fraud was reported in 1998, causing Cendant's market value to drop $14 billion in one day. Prosecutors said yesterday that there were 119,000 victims.
Forbes, who testified during the trial, said he knew nothing about the fraud. His codefendant, former Cendant vice chairman E. Kirk Shelton, was convicted in 2005 of conspiracy, mail fraud, wire fraud, securities fraud, and making false statements.
Shelton was sentenced to 10 years in prison and ordered to pay $3.27 billion restitution to the company. He is appealing.