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US: Ex-Cendant Executive Gets 10 Years in Prison

Associated Press
August 3rd, 2005

Former Cendant Corporation Vice Chairman E. Kirk Shelton was sentenced Wednesday to 10 years in prison for his role in an accounting scandal that cost investors more than $3 billion.

U.S. District Judge Alvin Thompson in Hartford also ordered Mr. Shelton to pay almost $3.3 billion in restitution, including an initial payment of $15 million by October, and monthly payments of $2,000 per month once he is out of prison.

Mr. Shelton, 50 years old, was convicted Jan. 4 of 12 counts of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the U.S. Securities and Exchange Commission.

Prosecutors said Mr. Shelton inflated revenue by $500 million at Cendant's predecessor, CUC International, to drive up the stock price. The fraud was reported in 1998, causing Cendant's market value to drop by $14 billion in one day.

The allegations of fraud at Cendant were among the first in corporate accounting scandals in recent years that sparked outrage from investors. At the time, the $3 billion fraud was the largest case of accounting fraud in the country, prosecutors said.

Lawyers for the U.S. attorney's office in Newark, N.J., which prosecuted Shelton and others in the case, said he showed no remorse for his actions.

Mr. Shelton's lawyer, Thomas Puccio, said he will appeal. He has said the businessman's case is atypical because Mr. Shelton didn't directly benefit from the scheme. He, like the Cendant stockholders, lost millions of dollars. Mr. Shelton was ordered to surrender to the U.S. Bureau of Prisons by Sept. 2.

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