Cendant has announced that it will be forced to cut back its 1998 earnings forecast, due to continuing problems generated by the discovery of fraud at its CUC group in April.

Citing "false entries which misrepresented the financial performance and condition" of CUC and "widespread and systemic" irregularities, the lending giant alleged that the fraud was worse than originally thought and that the company would have to refigure financial results for the past three years.

The company will be forced to re-lower its 1997 earnings per share by as much as 22 to 28 cents, instead of the projected 11 to 13 cents and reverse a "material portion" of the $200 million CUC merger charge, according to a REUTERS report.

The projected 1998 earnings will be refigured to between the break even point and six cents a share, or six cents lower than than previously estimated.

Allegations of fraud are catastrophic due to the fact that Cendant, the corporation was created in an $11 billion merger between HSF Inc. and CUC.