HARTFORD, Conn. – Former Cendant Corp. (search) Vice Chairman E. Kirk Shelton (search) was sentenced Wednesday to 10 years in prison and ordered to pay full restitution for his role in an accounting scandal that cost investors more than $3 billion.
U.S. District Judge Alvin Thompson in Hartford also ordered Shelton to pay almost $3.3 billion to Cendant, including an initial payment of $15 million by October and monthly payments of $2,000 per month once he is out of prison.
"I think it's what the law requires," said U.S. Attorney Chris Christie of New Jersey, whose office prosecuted the case. "It's obviously always based upon his ability to pay."
Shelton, 50, was convicted Jan. 4 of 12 counts of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the Securities and Exchange Commission (search).
Prosecutors said 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, a New York-based hotel franchisor and travel company that also owns the Avis and Budget car-rental companies, 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.
Prosecutors had argued for a harsh sentence, saying Shelton showed no remorse for his actions.
Shelton's lawyer, Thomas Puccio, said he will appeal. He has said the businessman's case is atypical because Shelton did not directly benefit from the scheme. He, like the Cendant stockholders, lost millions of dollars.
Shelton was ordered to surrender to the U.S. Bureau of Prisons (search) by Sept. 2.