7. CUC International Accounting Fraud
Year: 1997
Approx. Amount: $19 Billion*
Company / Person Involved: Kirk Shelton & Walter Forbes
At the end of 1997, the travel firm HFS, Inc. merged with CUC International, which was headed by Walter Forbes and Kirk Shelton, the CEO and president, respectively, to form Cendant Corp. It wasn’t until after the merger that the accountants at Cendant Corp. managed to uncover the truth about Forbes and Shelton’s previous business. Forbes and Shelton’s cooked books showed that CUC International had over-exaggerated when reporting their previous 3 years’ earnings by $500 million.
CUC International Accounting Fraud ©RomanR / Shutterstock.com
The following day, Cendant’s market value lost $14 billion, and investors lost just shy of $20 billion. For masterminding the biggest accounting fraud in history, Forbes and Shelton were sentenced to 12 and 10 years, and ordered to pay $2,000 per month to repay their debt. At that rate, it would take approximately 134,000 years to pay off their debt.