The Rise and Fall of Walter Forbes: A Corporate Saga

Walter Forbes, an American corporate executive, is a name forever entwined with one of the most notorious corporate scandals of the 1990s. Born in the early 1940s, Forbes carved out a reputation as a pioneering businessman, transforming CUC International into a behemoth of consumer services. Yet, his legacy is marred by legal battles that culminated in one of the largest restitution orders in history.

The Visionary at CUC International

In 1981, Forbes took the helm of CUC International, previously known as Comp-U-Card. His vision was ahead of its time: a membership-based electronic shopping service leveraging the emerging power of home computers. Despite this foresight, the reality of widespread home computer usage was still a decade away. Undeterred, Forbes pivoted CUC into direct-to-consumer home shopping clubs. Here, customers could place orders over the phone, and manufacturers would ship products directly to their homes at wholesale prices, all for an annual membership fee. By the early 1990s, Forbes had grown CUC into a $2 billion enterprise with over 50 million members and a catalog of more than 250,000 products.

The Online Shopping Revolution

Forbes’ ambitions took a digital turn in 1994 when he increased CUC’s investment in online shopping. He acquired NetMarket and launched Shoppers Advantage on America Online by the fall of 1995. CUC’s online ventures were groundbreaking, generating $400 million in product sales in 1996—a figure no other company could match at the time.

The Merger and the Unraveling

Forbes’ tenure as CEO concluded in 1997 with CUC’s merger with HFS Inc., forming Cendant Corporation. However, the glow of success was short-lived. By April 1998, Cendant exposed significant accounting improprieties at CUC, shaking the corporate world. Forbes found himself at the center of a legal storm, prosecuted by the U.S. Attorney's Office for the District of New Jersey. After enduring two mistrials due to jury deadlocks, Forbes was finally convicted in a third trial. He was found guilty of conspiracy to commit securities fraud and making false statements, having inflated reported incomes for Cendant Corporation during his leadership.

The Consequences and Aftermath

On January 17, 2007, Walter Forbes, then 64 years old, was sentenced to over 12 years in prison. The court ordered him to pay a staggering $3.28 billion in restitution, a sum matched by former vice chairman E. Kirk Shelton. Forbes’ restitution order held the record for being the largest ever imposed until it was surpassed by the $170 billion restitution order against Bernard Madoff in June 2009. Forbes served his sentence and was released from prison on July 20, 2018.

Personal and Educational Background

Walter Forbes’ educational achievements are notable, with bachelor’s and master’s degrees in journalism from Northwestern University, followed by an MBA from Harvard Business School. Despite the high-profile nature of his career and subsequent legal troubles, Forbes is not related to the Boston Forbes family or the family behind Forbes magazine.

Sources

For those intrigued by the saga of Walter Forbes, further reading can be found at the following resources:

• Fox, Justin (2007-04-19). "Taking Henry Silverman Private". TIME.
• "Computer As a Retailer". The New York Times (National edition): Section D, Page 1. January 9, 1981.
• Schwartz, Evan I. "It's! Not! Retail!". Wired.
• Chittum, R. (February 10, 2006). "Cendant Ex-Chairman's Case Ends in Mistrial a Second Time". Wall Street Journal.
• "No Leniency For Walter Forbes". Forbes.
• "Inmate Locator". www.bop.gov.
• "Fact Sheet: President's Corporate Fraud Task Force Marks Five Years of Ensuring Corporate Integrity". www.justice.gov.
• Norris, Floyd (10 February 2006). "In the Cendant Trial, Ignorance Was an Excuse". The New York Times.

For more comprehensive details, visit Walter Forbes on Wikipedia.