Former Hertz CEO Faced with Fraud Charges

Former Hertz CEO Mark Frissora was charged with fraud by the SEC on Thursday.

According to the Securities and Exchange Commission, the former Hertz CEO facilitated fraudulent financial statements and disclosures when he headed the corporation. Also adding that in 2013, Frissora pressured subordinates to “find money… re-analyzing reserve accounts” when its finances fell short of the forecast, causing those involved to effect changes to the financial reports.

The charges against the car rental company were on the grounds of aiding and abetting, and filing of inaccurate financial statement seven years ago.

The SEC also accused Frissora of keeping cars for stretched periods of time to reduce depreciation costs, and approving false earnings guidance in November 2013 when internal calculations showed project lower results. Earlier this year, Bloomberg reported that Hertz held cars for as long as 50,000 miles beyond the industry’s norm of 30,000, adding that Frissora wanted to put older vehicles side-by-side with the company’s best budget brands, including Dollar, Firefly, and Thrifty.

The complaint against the former Hertz CEO was filed in the federal court in New Jersey.

“We are committed to holding corporate executives accountable when their actions deprive investors of such information.”

The former Hertz CEO has agreed to pay the company nearly $2 million incentive-based compensation, and a $200,000 fine to drop the charges without accepting or denying the allegations against him.

“Investors are entitled to accurate and reliable disclosures of material information about a company’s financial condition,” said the Director of the SEC’s New York Regional Office, Marc P. Berger.

Last year, the SEC charges Hertz for an alleged scheme, of which the company agreed to pay a $16 million fine to drop the charges of fraud and other charges the SEC presented.

“Hertz revised its financial results in 2014 and restated then in July 2015. Reducing its previously reported pretax income by $235 million,” the SEC said.

Frissora officially left Hertz in 2014 after much pressure from some investors. He served as CEO from 2006 to 2014. On leaving Hertz, he served as CEO of Ceaser’s Entertainment, stepping down in 2019.

It was reportedly stated, last year, that Frissora sued Hertz and two other former executives to receive $70 million in incentive and severance payments.

In May, Hertz filed for Chapter 11 bankruptcy protection as the coronavirus pandemic ravaged its business, according to Hertz. A few days after filing for bankruptcy protection, one of the company’s biggest investors, Carl Icahn, who owned majority stake in Hertz sold his 39% stake in the company at a loss of $2 billion.