International A Membership Based Consumer Service

1343 Words6 Pages

On December 17th 1997 CUC International a membership-based consumer service company focused on giving people access to discounts on travel, shopping, etc. and HFC Incorporated a large hotel franchiser merged together and became Cendant. CUC International lead by Walter Forbes deliberately and fictitiously made the company more than $500 million fictional revenue, which in effect led to one of the biggest fraud cases of the 1990’s. This is a very interesting fraud case and one that forced the accounting and auditing standard setters to review some of their standards, which is something I’ll talk about more later on.
The fraud was very simple at its base; the idea was to allow the employees of CUC International and later Cendant to
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This could have been prevented or stopped if the revenue and expenses had been accounted for and recorded properly in the period they had occurred. It also could have been prevented had the internal auditing comity done their job and realized what was happening around them and brought this to the board of director’s attention.
What was going on internally at CUC International and later at Cendant was known to many employees, these people held different positions from managers all the way up to the CEO Walter Forbes and it was in fact two managers that came forward and brought all of this out to the open and their names were Casper Sabatino and Steven Speaks. They contacted the CFO of Cendant Mr.Monaco and explained to him the breathtaking fraud. And it was Mr.Monaco who delivered this news to Cendant’s Chief Executive Henry R. Silverman. Those two men were the whistleblowers that brought Cendant to its knees. As mentioned in the sworn affidavits the managers explained what was happening at Cendant, they said that they were told to record millions of dollars of orders that never occurred and were told to do what was necessary in order to increase the income on the books and decrease the expanses. In their statements they named two people whom have been responsible for putting pressure on their employees and ordering the accounting irregularities, these two people were Cosmo
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