U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20089 / April 25, 2007
Accounting and Auditing Enforcement Release No. 2600 / April 25, 2007
SEC v. Cosmo Corigliano, Anne M. Pember, Casper Sabatino, and Kevin T. Kearney, Defendants, and Agnes T. Corigliano, Carleton H. Pember IV, and Mary Louise Scully, Relief Defendants, Civil Action No. 00-2873 (D.N.J. filed June 14, 2000)
SEC Settles With Former Cendant Corporation Accounting Executive for Role in Cendant Financial Fraud
The U.S. Securities and Exchange Commission (Commission) today announced that it had submitted to the U.S. District Court for the District of New Jersey for filing a proposed settled Final Judgment as to Defendant Anne M. Pember and Relief Defendant Carleton H. Pember IV, in the Commission's previously filed civil injunctive action against Anne M. Pember (Pember) and others, Securities and Exchange Commission v. Cosmo Corigliano, Anne M. Pember, Casper Sabatino, and Kevin T. Kearney, Defendants, and Agnes T. Corigliano, Carleton H. Pember IV, and Mary Louise Scully, Relief Defendants, Civil Action No. 00-2873 (D.N.J). The Commission filed its injunctive action on June 14, 2000. The Commission's complaint in that action alleged that for several years the management of CUC International Inc. (CUC) operated a fraudulent scheme that added hundreds of millions of dollars to the reported operating income of CUC and, subsequently, of its corporate successor, Cendant Corporation (Cendant). On July 25, 2000, the Commission amended its complaint and, among other things, named Pember's spouse, Carleton H. Pember IV, as a relief defendant.
The proposed final judgment would permanently enjoin Pember from violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5, 13b2-1, and 13b2-2, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-13, 13b2-2, and 14a-9. The proposed final judgment also would bar Pember, pursuant to Section 21(d)(2) of the Exchange Act, from serving as an officer or director of a public company and would order her to provide written notification to the successor corporate entities of Cendant that she unconditionally and irrevocably consents to the immediate cancellation and termination of all her existing options to purchase common stock in those successor entities. Finally, the proposed final judgment would order Pember and Carleton Pember to pay disgorgement in the aggregate amount of $100,000. Pember and Carleton Pember each consented to the entry of the proposed final judgment, without admitting or denying the allegations of the Commission's amended complaint.
From 1989 to 1997, Pember was Controller of CUC's largest division, the Comp-U-Card division. Beginning in June 1997, she became CUC's Controller and continued in that position until the December 1997 merger of CUC and HFS Incorporated. That merger formed Cendant. From the time of the merger until March 1998, she was part of the management of the accounting unit at Cendant Membership Services, the post-merger name for the former CUC business units. The Commission's amended complaint alleged that, while in those positions, Pember played an important role in the CUC/Cendant financial fraud.
As part of the settlement, Pember agreed to settle a proposed administrative proceeding against her pursuant to Rule 102(e) of the Commission's Rules of Practice, to be based on the entry of the proposed injunction. Pursuant to her offer, Pember would consent to the issuance of a Commission order permanently suspending her from appearing or practicing before the Commission as an accountant, without admitting or denying the findings set forth therein.
Finally, the Commission noted that the Office of the U.S. Attorney for the District of New Jersey has announced that, on January 29, 2007, in her related criminal prosecution, Pember was sentenced to two years probation and 200 hours of community service. The Office stated that, during her sentencing, the U.S. District Judge noted Pember's cooperation in the government prosecution of the former Chairman and Vice Chairman of Cendant.