Former Cedent executive sentenced

Former Cedent executive sentenced

	Published : Mon, 29 Jan 2007 17:05 By : Agencies Print this Story

BRIDGEPORT, Conn. (AFX) - A former executive was spared prison time Monday for her role in a massive accounting scandal at Cendant Corp. that cost the company and its investors more than $3 billion.

Anne Pember, 47, who pleaded guilty to conspiracy in 2000, was sentenced to two years of probation and 200 hours of community service.

Pember asked to be spared prison time, citing her extensive cooperation with federal investigators. Prosecutors agreed.

'I think your cooperation and your testimony was quite extraordinary,' said Senior U.S. District Judge Alan H. Nevas.

Pember was controller at CUC International of Stamford, which merged with HFS Inc. of Parsippany, N.J., to create Cendant in December 1997. Pember became Cendant's senior vice president for accounting.

Prosecutors say the scheme inflated the stock value of CUC International, Cendant's predecessor, by $500 million.

The fraud cost the travel and real estate company and its investors more than $3 billion. The fraud was reported in 1998, causing Cendant's market value to drop by $14 billion in one day.

Pember and other defendants have said CUC's quarterly earnings were inflated in the two years leading up to the merger through improper accounting methods, including underfunding a reserve, accelerating recognition of revenues, deferring expenses, and drawing money from a merger account to boost revenues.

Cosmo Corigliano, CUC's former chief financial officer, is scheduled to be sentenced Tuesday. He also has asked to be spared prison time, citing his extensive cooperation in the investigation.

Former Cendant Corp. Chairman Walter Forbes was sentenced to 12 years and seven months, while Vice Chairman E. Kirk Shelton received a 10-year sentence. Both men were ordered to pay $3.275 billion in restitution.

The Cendant case was among the first in a series of corporate accounting scandals that sparked outrage from investors in recent years.

Cendant's brands included Ramada, Howard Johnson, Avis, Coldwell Banker and Century 21.

In September, Cendant stockholders changed the company's name to Avis Budget Group to reflect its Avis and Budget vehicle rental brands. Its real estate and hotel businesses were spun off as stand-alone companies and the company sold its travel distribution operations.