U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18711 / May 14, 2004
ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 2014 / May 14, 2004
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 (KSH-PS) (D.N.J. filed June 14, 2000)
In the Matter of Cosmo Corigliano, CPA, Administrative Proceeding File No. 3-11490
SEC SETTLES WITH FORMER CFO OF CUC INTERNATIONAL INC. FOR HIS ROLE IN FINANCIAL FRAUD AT CUC AND CENDANT CORPORATION
Former CFO Agrees to Transfer Most of His Assets to Court-Appointed Receiver, as Disgorgement of His Unjust Enrichment from the Fraud
Commission Also Permanently Suspends Former CFO from Practicing or Appearing Before the Commission as an Accountant.
The U.S. Securities and Exchange Commission ("Commission") today announced that, on May 7, 2004, the U.S. District Court for the District of New Jersey entered a settled Final Judgment as to Defendant Cosmo Corigliano, Relief Defendant Agnes T. Corigliano, and Relief Defendant Mary Louise Scully, in the Commission's previously filed civil injunctive action against Cosmo Corigliano 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 (KSH-PS) (D.N.J. filed June 14, 2000). Pursuant to the Final Judgment, Cosmo Corigliano and his spouse, relief defendant Agnes T. Corigliano, must transfer all their assets, except for certain exempted items, to a Court-appointed Receiver, as disgorgement of Cosmo Corigliano's unjust enrichment from a long-running financial fraud that he helped supervise and direct during his time at CUC International Inc. (CUC), the corporate predecessor of Cendant Corporation (Cendant). The assets ordered transferred have an aggregate value of at least $14 million and include all the Coriglianos' cash and securities, all balances held by them in savings, money market, IRA, Keough, pension, or brokerage accounts, and the majority of certain funds previously held in trust for the benefit of the Coriglianos' minor children, for which relief defendant Mary Louise Scully serves as trustee.
Pursuant to the Final Judgment, Cosmo Corigliano is enjoined 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, and 14a-9. The Final Judgment also permanently bars Cosmo Corigliano from serving as an officer or director of a public company. Cosmo Corigliano, Agnes T. Corigliano, and Mary Louise Scully each consented to the entry of the Final Judgment, without admitting or denying the allegations of the Commission's complaint, except for jurisdiction.
Cosmo Corigliano served as Controller of CUC from 1983 to 1995 and as its Chief Financial Officer from 1995 until the December 1997 merger of CUC and HFS Incorporated, which formed Cendant. After the merger, he was an officer of Cendant Membership Services, the post-merger name for the former CUC business units, until his resignation from Cendant in April 1998.
The Commission's complaint alleged, among other things, that Corigliano, as Controller of CUC, assisted senior CUC officers who initiated the long-running financial reporting fraud and, later, as CUC's Chief Financial Officer, proceeded to orchestrate and refine the fraud. The complaint further alleges that, as Chief Financial Officer, Corigliano was the CUC officer responsible for creating and maintaining a schedule that CUC officers used to track their fraudulent scheme during the course of each fiscal year. He was responsible for keeping more senior CUC officers apprised about the progress of the scheme. While Chief Financial Officer, Corigliano directed CUC mid-level financial reporting managers to make unsupported quarterly top-side adjustments to CUC's earnings as reported in its quarterly Reports on Form 10 Q filed with the Commission. He also instructed less senior CUC managers to make unsupported journal entries effectuating year-end adjustments that improperly inflated CUC's operating income and earnings as reported in its annual Reports on Form 10 K filed with the Commission. The complaint further alleges that, while engaged in these activities, Corigliano signed CUC's periodic reports filed with the Commission and made materially false statements to CUC's auditors.
The Commission also announced that today it had issued an order instituting settled administrative proceedings pursuant to Rule 102(e) of the Commission's Rules of Practice against Cosmo Corigliano, based on entry of the injunction against him pursuant to the Final Judgment. Simultaneous with the institution of the administrative proceedings, and without admitting or denying the findings contained therein, except as to jurisdiction and as to entry of the injunction, Cosmo Corigliano consented to the issuance of the Commission Order, which permanently suspends him from appearing or practicing before the Commission as an accountant.