Federal officials on Monday charged the former head of the nation's largest pension fund and one of his business associates with falsifying documents and other charges in a long-running influence peddling and bribery investigation.
A grand jury in San Francisco charged Federico Buenrostro Jr. and Alfred Villalobos, and they were booked and released on bond Monday after briefly appearing in court.
Buenrostro, 64, served as CEO of the California Public Employees' Retirement System from late 2002 until June 2008. Villalobos, 69, served on the CalPERS board and is a former vice mayor of Los Angeles.
The indictment alleges the two conspired to fabricate documents that certified to federal regulators that Villalobos' firm had obtained required "investor disclosure letters" from CalPERS to serve as a "transfer agent." The indictment charges that the falsified documents allowed Villalobos to reap $14 million in fees for serving as a middleman between CalPERS and a prominent investment firm handling $3 billion in CalPERS' money.
The two have already been sued by state and federal officials.
The Securities and Exchange Commission alleged in its 2012 lawsuit that the pair fabricated documents to trick investment firm Apollo Global Management into paying fees to Villalobos' firms for helping sell securities.
The documents had a fake CalPERS logo and gave Apollo the false impression that the pension system, before investing, had properly reviewed and signed fee disclosure letters, the SEC said.
The fabrication allegedly occurred in January 2008, when Buenrostro was CEO of CalPERS, which runs a $255 billion fund for more than 1.6 million California employees, non-teaching school employees, local government workers and their dependents.
Buenrostro's lawyer Bill Kimball didn't return a phone call seeking comment.
Villalobos' previous law firm dropped him as a client after he filed for bankruptcy and could no longer afford to pay the firm's fees. He couldn't be reached Monday.
CalPERS said the scandal prompted it to adopt a long list of reforms including limiting middlemen's fees and limiting gifts to staff and board members from firms doing business with the pension fund.
"We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust," said Rob Feckner, president of the CalPERS board. "This is a long-awaited indictment of two former officials, and is another step on the road toward justice for California's taxpayers, public employees and for all of CalPERS staff and stakeholders."
© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.