Three former executives of Cendant Corp., New York, entered guilty pleas to accounting fraud charges yesterday, according to reports.
The three, former chief financial officer Cosmo Corigliano, former controller Anne Pember, and former vice president of accounting and financial reporting Casper Sabatino, were all employed by CUC International when it merged in late 1997 with HGS Inc. to form Cendant Corp.
According to reports, Corigliano pleaded guilty to wire fraud and conspiracy to commit mail fraud and wire fraud, as well as causing false statements to be filed with the Securities and Exchange Commission. Pember admitted to the conspiracy to commit mail and wire fraud charges that had been lodged against her, and Sabatino entered a guilty plea regarding aiding and abetting wire fraud charges.
All three have claimed that their actions were made at the request of their supervisors, reports said. All have agreed to assist with the continuing investigations.
The charges had been brought by the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the United States Postal Service.
In April 1998, Cendant admitted to “accounting irregularities” and subsequently revised its financial statements (and those of CUC International for the time preceding the merger) for the years 1995, 1996 and 1997.
After the company’s stock price plummeted, shareholders brought a class-action suit against the company, which resulted in a $2.83-billion decision against it last December.
In a statement issued shortly after the pleas were announced yesterday, the company said that “the actions by the U.S. Attorney and the SEC today establish that this was a sinister fraud of more than 12 years’ duration, which current Cendant management inherited from theformer CUC. It validates what we have said all along; that this elaborate scheme, designed by senior management of the former CUC, hid the fraud from the public and from the former HFS prior to the CUC/HFS merger. Additionally, since the fraud was going on for at least 12 years, it supports Cendant’s contention that it could not have occurred without the gross negligence, if not more, of CUC’s auditors.”
In the statement the company pledged to cooperate with the SEC and U.S. Attorney’s offices continuing investigations, which include other members of CUC’s management in their scope.
