certain members of CUC's senior management implemented a scheme designed to ensure that CUC always met the financial results anticipated by Wall Street analysts
Approx. 1985
pretax operating income reported to the public by CUC was inflated by an aggregate amount of over $500 million
1995 - 1997
The commission alleged that Forbes orchestrated an earnings management scheme at CUC to improperly inflate the company's quarterly and annual financial results during the period 1995 to 1997
1995 - 1997
Hiznay approved a series of entries reversing the commissions payable liability account into revenue at CUC
Approx. 1997
fiscal year-end, senior management utilized this liability account by directing post-closing entries moving amounts from the liability directly into revenue
January 31, 1997
January 31, 1997, fiscal year-end, the balance in the CUC membership cancellation reserve was $29 million; CUC accounting personnel were holding $100 million in rejects and $22 million in cancellation
January 31, 1997
Hiznay received a schedule from the CUC controller setting forth the amounts, effective back-dates, and accounts for a series of postclosing entries reducing the commissions payable account by $9.12
February 1997
Cendant had plans, which it did not disclose to defendants and EY, to use a material amount of the reserve to artificially inflate income in subsequent periods
December 1997
Cendant Corporation was created through the merger of HFS and CUC
December 17, 1997
CUC and Cendant filed false and misleading annual reports with the commission that misrepresented their financial results, overstating operating income and earnings and failing to disclose that the fi
1998
senior Cendant management had discussed plans to fraudulently use over $100 million of the Cendant reserve to create fictitious 1998 income, which was also concealed from the defendants and EY
March 1998
• At the time of the merger, Shelton became a Cendant director and vice chair. Shelton resigned from Cendant
April 1998
• After the Cendant merger, Forbes served as Cendant's board chair until his resignation
July 1998
BR&B announced on behalf of the lead plaintiffs the landmark $2.85 billion settlement with Cendant that far surpassed the recoveries in any other securities law class action case in history
December 1999
Litigation
2000 - 2007
SEC complaints filed • alleged violations of the federal securities laws by four former accounting officials including Cosmo Corigliano, CFO of CUC; Anne M. Pember, CUC controller; Casper Sabatino, v
June 14, 2000
the SEC filed a civil enforcement action in the U.S. District Court for the District of New Jersey against Walter A. Forbes, the former chair of the board of directors at CUC, and E. Kirk Shelton, the
February 28, 2001
U.S. Supreme Court determined that it would not hear any further appeals in the case.
March 2002
SEC announced a final judgment against Walter A. Forbes, the former chair of Cendant, arising out of his conduct in the Cendant fraud
