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Parent firm ResortQuest
sues Aston’s TatibouetEx-Cendant execs plead
By Russ Lynch
guilty to accounting fraud
Star-BulletinResortQuest International Inc. has sued Honolulu businessman Andre Tatibouet, claiming he illegally transferred the Aston Hotels & Resorts brand name to a ResortQuest competitor, Cendant Corp.
Tatibouet's lawyer, James Bickerton, called the claims against Tatibouet "completely without merit" and said a company owned by Tatibouet, AST Brands, owns the rights to the Aston brand and can use it in any way it wants.
In Hawaii, ResortQuest does business as Aston Hotels & Resorts, which is the brand name of Hotel Corp. of the Pacific. While Tatibouet is CEO of Hotel Corp., he had no right to transfer the Aston brand without the parent company's permission, says ResortQuest.
Bickerton said the brand-name dispute belongs in arbitration, not in the courts, and that he believes the lawsuits are in retaliation to Tatibouet's earlier request for the binding arbitration, which he said is required in ResortQuest's bylaws.
David Levine, chairman of Memphis, Tenn.-based ResortQuest, said the lawsuits were filed to protect ResortQuest's shareholders and customers. Beyond that, he could not comment because the matter is in litigation, Levine said.
Among the allegations against Tatibouet and New York-based Cendant, in lawsuits in federal and state courts, is the claim that Tatibouet allowed Cendant to transfer the Aston Web site and the aston-hotels.com domain name to Cendant's server. That action even resulted in some Aston e-mail not reaching ResortQuest in early May and going instead to Cendant, the lawsuits claim.
While the Web site and the domain name have been returned to the ResortQuest subsidiary Hotel Corp. of the Pacific, which does business as Aston Resorts & Hotels, Cendant refuses to sign over the registration of the domain name, the lawsuits allege.
Hotel Corp. was founded by Tatibouet in 1967 and adopted the Aston name for its operations in 1986. The company grew into one of Hawaii's largest resort condominium management companies, handling nearly 5,000 rental units on 30 properties with 2,100 employees. In 1998, Tatibouet sold Hotel Corp. to Memphis-based Vacation Properties International for nearly $30 million and 1.7 million shares of stock. Vacation Properties then became ResortQuest by combining a dozen other vacation property management business with Aston in a new public company. ResortQuest now operates 29 such businesses.
Tatibouet still holds more than 1.3 million shares, a 7.2 percent interest in ResortQuest.
ResortQuest said Cendant had a close look at its books under a confidentiality agreement in mid-1999 because Cendant was considering acquiring ResortQuest.
No deal transpired but in March, Tatibouet's AST Brands sold some of its assets to Cendant and Tatibouet allegedly signed a cooperative agreement with Cendant.
That was the point at which Tatibouet transferred the Aston Web site and aston-hotels.com domain name to Cendant, ResortQuest alleges.
The company is asking the court to declare that transfer void because Tatibouet allegedly did not have the authority to do it. ResortQuest is also seeking unspecified damages from Tatibouet and Cendant.
Bickerton said that Tatibouet granted a limited license to Hotel Corp. of the Pacific, under ResortQuest's ownership, to use the Aston name under very narrow conditions.
Tatibouet has an agreement with ResortQuest that allows him to "engage in activities to freely license and franchise the Aston brand worldwide," Bickerton said.
Now ResortQuest, recognizing that Aston creates about half its profits, apparently regrets that decision and wants to take it back, Bickerton said.
Ex-Cendant execs plead
Associated Press
guilty to accounting fraudNEWARK, N.J. -- Three former executives at franchising giant Cendant Corp. pleaded guilty today to inflating revenues in an accounting scandal that led to the largest-ever settlement in a shareholder class-action suit. The disclosure of those irregularities two years ago led to a one-day, $14 billion meltdown in Cendant's market value, making it "the largest financial fraud case we've ever brought," said Thomas C. Newkirk, associate director of the Securities & Exchange Commission.
All three held senior financial posts at CUC International of Stamford, Conn. The company merged with HFS Inc. of Parsippany, N.J., to create Cendant in December 1997. Cendant is now based in New York.
Under oath, they said their actions were done at the behest of their superiors at CUC and that they will cooperate in a continuing investigation that involves the FBI and the SEC.
"It was ingrained in us by our superiors," said one of those pleading guilty, Cosmo Corigliano, CUC's former chief financial officer.
The defendants said CUC's quarterly earnings were inflated in the two years leading up to the merger through improper accounting methods, including underfunding a reserve on membership cancellations and drawing money from a merger account in efforts to boost revenues. "Don't we call that "cooking the books?'" U.S. District Judge William H. Walls asked Casper Sabatino, a CUC accountant in charge of external reporting.
Also pleading guilty was Anne Pember, CUC's former controller. The three admitted their actions led CUC to overstate operating income by $116 million in the two years before the merger, and Cendant to overstate its operating income by $170 million for 1997.
