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Former Hertz CEO Charged With Aiding And Abetting Accounting Fraud

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Former Hertz CEO Mark Frissora on Thursday was charged with aiding and abetting the company in its filing of inaccurate financial statements in 2013, the Securities and Exchange Commission announced Thursday.

Hertz Hybrid

Former Hertz Chairman and CEO Mark Frissora poses with a Toyota Prius hybrid car on Thursday, June … [+] 14, 2007, in New York.


AP Photo/Mark Lennihan

KEY FACTS

According to the SEC, Frissora in 2013 pressured subordinates to “find money” by re-analyzing reserve accounts when results fell short, which caused them to make changes to financial reports.

The agency also accuses Frissora of failing to properly disclose to investors that Hertz was keeping cars for longer periods of time to cut down on depreciation costs.

Bloomberg reported earlier this year that Hertz kept cars around for as long as 50,000 miles, way past the industry norm of 30,000, and that Frissora wanted to place 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 admitting or denying the allegations. 

The company itself was already charged 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 a bid to recoup $70 million in incentive and severance payments from them.

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

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

Key background

Hertz filed for Chapter 11 bankruptcy protection in May, saying the coronavirus pandemic has depleted its business. Days after the filing, legendary investor Carl Icahn, who owned the majority of Hertz’s shares, sold his entire 39% stake in the company at a $2 million loss. Hertz says it intends to remain in business.

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