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The former Hertz CEO is accused of aiding and abetting accounting fraud



Topline

Former Hertz CEO Mark Frissora was accused on Thursday of aiding and abetting the company in filing inaccurate financial statements in 2013, the Insurance and Exchanges Commission announced on Thursday.

KEY FACTS

According to the SEC, Frissora in 2013 pressured subordinates to “make money” by reviewing reserve accounts when results fell short, prompting them to make changes to financial reports.

The agency also accuses Frissora of not properly disclosing to investors that Hertz was holding the car for longer periods of time to reduce depreciation costs.

Bloomberg reported earlier this year that Hertz held cars for about 50,000 miles, exceeding the industry rate of 30,000, and that Frissora wanted to install older vehicles with the company’s budget brands Dollar, Thrifty and Firefly.

Frissora has agreed to repay Hertz nearly $ 2 million in incentive-based compensation and pay a $ 200,000 fine to settle the charges without accepting or denying the claims.

The company itself had already been indicted by the SEC last year for the alleged scheme, and agreed to pay $ 16 million to settle the charges.

Last year, Hertz sued Frissora and two other former executives in an attempt to compensate $ 70 million in incentive payments and severance pay.

After leaving Hertz in 2014 under pressure from activist investors, Frissora served as CEO of Caesar’s Entertainment and retired in 2019.

Hertz did not immediately respond to a request for comment by Forbes.

The main background

Hertz filed for Chapter 11 bankruptcy defense in May, saying the coronavirus pandemic has impoverished its business. Days after the listing, legendary investor Carl Icahn, who owned a majority stake in Hertz, sold all of his 39% stake in the company at a loss of $ 2 million. Hertz says he intends to stay in business.


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