The wife of the man responsible for the largest accounting fraud of the 1990s has filed for divorce — but federal prosecutors say the timing suggests that the couple is trying to avoid paying billions of dollars in penalties, not that their marriage is on the rocks.
Prosecutors note that former Cendant chairman Walter Forbes sold the family's nearly $6 million, 11,000-square-foot, seven-bedroom Colonial mansion to his wife, Caren, for $10 in 1999.
Caren Forbes, who filed for divorce in Bridgeport Superior Court in January and says their marriage of 27 years is "irretrievably" broken, wants the court to transfer the property, which is subject to liquidation, into her name, prosecutors said.
Forbes was sentenced in 2007 to more than 12 years in prison and ordered to pay restitution for his role in a fraud scheme that cost the travel and real estate company and its investors more than $3 billion.
Prosecutors, who have accused Forbes of hiding some assets to avoid paying the $3.275 billion penalty, say the divorce filing is a ploy and have asked to intervene.
"The timing of this filing suggests its purpose is to frustrate the enforcement of the court ordered restitution," prosecutors wrote.
"The government spent substantial time and taxpayer money to obtain this restitution order and bring Mr. Forbes to justice," they wrote. "This court should not allow the Forbes family to undermine the government's work to enforce the restitution order under the guise of a simple, uncontested family court matter."
Long before the divorce filing, Forbes' wife was aware of the fraud allegations against her husband "and she was aware of Mr. Forbes' numerous other indiscretions," prosecutors wrote.
"Nevertheless, she has chosen now to file for divorce — now that the civil lawsuit threatens to take from her possession property that is the product of fraud," prosecutors wrote.
William Champlin, Caren Forbes' attorney, called the government's divorce claims "ridiculous."
"We have no intention of using the family court for that purpose," Champlin said.
Robert Fried, Walter Forbes' attorney, also denied the accusations.
"I know of nothing improper being done by Mr. Forbes in this case," Fried said.
Fried said he did not expect the government's motion to intervene to be granted, saying he was not aware of any instances in which a third-party creditor was allowed to intervene in a divorce case. But he said attorneys were trying to resolve the issue.
The Cendant case was among the first in a series of corporate accounting scandals that sparked outrage from investors in recent years.
Forbes was convicted in 2006 of conspiracy to commit securities fraud and two counts of making false statements. Cendant's brands included Ramada, Howard Johnson, Avis, Coldwell Banker and Century 21. It has since been renamed Avis Budget Group.
A conference in federal court is planned next week to discuss settlement efforts over the restitution.