A federal appeals court upheld the conviction of former Cendant Corp. Chairman Walter Forbes Monday for leading the largest accounting fraud of the 1990s.

The 2nd U.S. Circuit Court of Appeals in New York upheld Forbes’ conviction on conspiracy to commit securities fraud and two counts of making false statements. Forbes was sentenced to 12 years and seven months in prison and ordered to pay more than $3 billion in restitution.

Forbes was involved in a fraud that inflated revenue by more than $500 million at Cendant’s predecessor, Stamford-based CUC International, to drive up the stock price. The fraud was reported in 1998, causing Cendant’s market value to drop by $14 billion in one day.  The fraud cost the company and 119,000 investors more than $3 billion.

The appeals court concluded that prosecutors’ use of the term “$14 billion fraud” in their opening statement was not misleading and prejudicial. They also said the District Court correctly ruled that references to the company’s decline in stock price and investor losses were permissible.  Last year, Cendant stockholders changed the company’s name to Avis Budget Group (Charts, Fortune 500) to reflect its Avis and Budget vehicle rental brands.  It is well known that he attempted to use offshore banking to hide assets.

The Cendant case was among the first in a series of corporate accounting scandals that sparked outrage from investors in recent years.  The case was tried after two previous juries deadlocked.  Forbes, who testified during the trial, has argued he knew nothing about the fraud. His co-defendant, former Cendant Vice Chairman E. Kirk Shelton, was convicted in 2005 of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the SEC.  Shelton was sentenced to 10 years in prison and ordered to pay $3.27 billion restitution to the company.

Forbes was chief executive officer of CUC and Shelton was president before the membership marketing operation merged with the travel and real-estate services company HFS Inc. to form New York-based Cendant in December 1997.  Not very suprised at this outcome as the guy is a dirty as a pig rolling in it’s own shit.

German lender IKB Industriebank AG, hit by its exposure to the U.S. subprime lending crisis, expects to lose up to €700 million ($954 million) this fiscal year as it aims for a “fresh start,” the company said Monday.

However, the bank - which has won help from the state-owned KfW development bank and other banks to help protect its exposure to subprime mortgage securities - said its “liquidity position for the next six months is covered without raising new capital market funds.”

IKB’s problems sprang from its Rhineland Funding investment vehicle’s apparent inability to cover its funding needs because of exposure to U.S. subprime real estate loans, made to borrowers with weak credit histories.

In late July, IKB abandoned a profit forecast for the 2007-2008 fiscal year of €280 million ($382 million). It said it had “felt the impact of the crisis in the U.S. sub-prime mortgage market,” and said its chief executive, Stefan Ortseifen, had resigned.

Germany’s bigger banks so far have reported only minimal exposure but we will have to see what the truth is, as more reports come in.

NBC Universal said Tuesday it will double the size of its cable operations outside the United States with the acquisition of Sparrowhawk Media, the private equity-backed owner of the Hallmark channel.

Sparrowhawk, with 18 channels, will be integrated into NBC’s global networks division, bolstering its channel offering to 30 and bringing in an additional 60 million subscribers.

A source familiar with the matter told Reuters on Monday that NBC was buying Sparrowhawk for around $350 million.  Terms of the transaction were not disclosed on Tuesday.

The relationship between Sparrowhawk and NBC goes back several years, starting with a licensing deal involving “Law and Order.” NBC is the biggest supplier of programming content to Sparrowhawk.

Hallmark’s international channels broadcast across 152 territories in Europe, the Middle East, Africa, Latin America and Asia. Its library of classic films includes “Moby Dick” and “Gulliver’s Travels.”

Hallmark UK, the largest channel in the group, carries NBC Universal series such as “Law & Order,” “House” and “Monk.”

NBC Universal is 80 percent owned by General Electric Co. (Charts, Fortune 500), with the rest owned by French media and telecoms group.  Not a suprise to industry insiders but a great move on NBC’s part.