2002-12-11 -- Forbes, Walter A. and E. Kirk Shelton -- Superseding Indictment -- News Release

New Indictment Adds Insider Trading Charges, Securities Fraud Against former Cendant Executives

BRIDGEPORT, CT. - A federal grand jury returned new charges this evening against Walter A. Forbes of New Canaan, the former chairman of Cendant Corp., accusing him of selling more than $11 million in company stock about a month before a massive accounting fraud was revealed at Cendant, U.S. Attorney for the District of New Jersey, Christopher J. Christie, announced.

The insider trading charges against Forbes, 60, of New Canaan, are in addition to other new charges against him and E. Kirk Shelton, 47, of Darien, the former Cendant vice chairman. The new charges consist of a new count of making a false statement to the Securities & Exchange Commission and new counts of securities fraud, which identify a new institutional shareholder victimized by the fraud, the Hartford Steam Boiler Inspection and Insurance Company Employees' Retirement Trust.

The retirement trust bought 32,500 shares of Cendant stock at approximately $35 per share two to three months before the stock plummeted when news of the fraud hit Wall Street, Christie said.

The original charges in this case were brought by a federal grand jury sitting in Newark. A Bridgeport, CT. grand jury returned this new indictment following the transfer of the criminal case against Forbes and Shelton from New Jersey to the District of Connecticut. The case is assigned to the U.S. District Judge Alvin W. Thompson of the U.S. District Court in Hartford. U.S. District Judge William H. Walls, in Newark, ordered the case transferred to Connecticut.

Forbes and Shelton will likely be arraigned on the new Indictment in January.

This is the second Superseding Indictment returned in the case. (Go the Public Affairs Office website - www.njusao.org - to see the new and preceding Indictment in the case, as well as news releases, including those related to guilty pleas from cooperating co-defendants in the case.

The new Indictment charges Forbes with four counts of insider trading (Count 13 through Count 16). Each of those counts carries a maximum penalty of 10 years in prison and a $1 million fine. Forbes and Shelton are each charged in all other counts as follows: Count One, conspiracy, which carries a maximum penalty of five years in prison and a $25,000 fine; Count Two and Three, mail fraid, and Count Four, wire fraud, each of which carry a maximum penalty of five years in prison and a $250,000 fine; Counts Five and Six, making false statements to the Securities and Exchange Commission, which carry a maximum penalty of 10 years and a $1 million fine; Counts 7 through 12, securities fraud, which carry a maximum penalty of 10 years and a $1 million fine.

An Indictment is a formal charge made by a grand jury, a body of 16 to 23 citizens. A grand jury may vote an Indictment if 12 or more jurors find probable cause to believe that the defendant has committed the crime or crimes charged.

Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

Christie credited Special Agents of the FBI, under the direction of Kevin Donovan, Special Agent in Charge of the FBI's Newark Office, and Postal Inspectors of the U.S. Postal Inspection Service, under the direction of Martin Phanco, Postal Inspector in Charge in Newark, for their skill and persistence in investigating the case.

The government is represented in the case by Assistant U.S. Attorneys John J. Carney, James McMahon and Richard J. Schechter.

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Defense attorneys:

Forbes: Brendan V. Sullivan, Jr., Esq. Washington

Shelton: Martin Auerbach, Esq. New York