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A federal judge declared a mistrial Thursday in the accounting fraud trial of former Cendant Corp. Chairman Walter Forbes.

Mr. Forbes, whose first trial last year ended in a mistrial because jurors could not reach a verdict, was accused of participating in a scheme that cost the company and investors more than $3 billion.

The jury had been deliberating in Hartford for 27 days.

A clerk for U.S. District Judge Alvin W. Thompson said jurors sent a note to the judge this morning saying they believed they were deadlocked. Judge Thompson, who had encouraged the jury to work through previous deadlocks, discussed the note with the jurors then discharged them.

Mr. Forbes's first trial ended in a mistrial last year when jurors also failed to reach a verdict. New Jersey's U.S. attorney's office, which prosecuted the case, now must decide whether to ask for a third trial. They said Thursday they were reviewing their options.

In the most recent trial, prosecutors reduced the number of charges from 16 to four -- conspiracy to commit securities fraud, securities fraud and two counts of false reporting to the U.S. Securities and Exchange Commission.

Mr. Forbes argued that he did not know about the fraud.

Jurors last year convicted Mr. Forbes's co-defendant, Cendant Vice Chairman E. Kirk Shelton, of conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the SEC. Mr. Shelton was sentenced to 10 years in prison and ordered to pay $3.27 billion in restitution to Cendant, including a balloon payment of $15 million and monthly installments of $2,000 after he is released from prison.

Prosecutors accused Mr. Shelton of inflating revenue by $500 million at Cendant's predecessor, 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. CUC, which ran a membership-marketing operation, merged with HFS Inc., a travel and real-estate services company, to form Cendant. Its brands include Ramada, Howard Johnson, Avis, Coldwell Banker and Century 21.

The Cendant allegations were among the first in a series of corporate accounting scandals in recent years that sparked outrage from investors. At the time, the $3 billion fraud was the largest case of accounting fraud in the country, prosecutors said. It has since been overshadowed by massive fraud at bigger companies such as Enron Corp. and WorldCom.

Mr. Forbes was chief executive officer of CUC and Mr. Shelton was president before CUC merged with HFS Inc. to form New York-based Cendant in December 1997.

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