CREDIT TO DALE KASLER @ SACBEE.COM
The nation’s largest public pension fund is CalPERS (California Public Employees’ Retirement System). CalPERS has been embroiled in a bribery scandal involving former Board Member, Alfred Villalobos who sat on the board from 1993 to 1995 and former CEO, Federico Buenrostro Jr. Once Villalobos was off the Board, he became a middleman in obtaining CalPERS investments for private equity clients earning $50 million for himself between 2005 and 2009. Most of the investments brokered by Villalobos have been profitable for CalPERS.
One of the issues are $250,000 in bribes and gifts to Federico Buenrostro Jr., CEO of CalPERS from 2002 to 2008 and admittedly a close friend and later business associate of Villalobos.
Villalobos, who pleaded not guilty, was weeks away before the start of his federal trial on bribery and fraud charges. He was looking at facing up to 30 years in prison if convicted. On Tuesday, January 14th, he is believed to have fatally shot himself at a public shooting range in Reno, Nevada. His lawyer, Bruce Funk, appeared before the Judge the next day with the intention of asking for a delay in the case due to Villalobos’ poor health but instead informed the Judge that his client had died of an apparent suicide.
Apollo Management, a Wall Street private equity firm, requested records from the duo. Villalobos helped Apollo land a $3 billion CalPERS investment deal. This is considered influence peddling. Apollo paid Villalobos $14 million in fees. Apollo has not been accused of wrongdoing. Last August, Villalobos and Buenrostro were charged with conspiring to create phony documents to satisfy a request for legitimate records from Apollo.
CalPERS currently has $293 billion in assets and provides retirement security to 1.7 million state and local government workers, retirees and their families. Villalobos’ death brings to an end seven years involving corruption and deal-making at CalPERS. Due to the scandal, the pension fund has made a number of changes in its’ governance and ethics policies. Laws requiring investment middlemen to register with the state as lobbyists are before the legislature. Also, the legislature put together new tougher rules for placement agent registration and financial disclosure.
The case against Buenrostro will proceed as planned.