| July 11
July 11 A former chief executive of the largest
U.S. public pension fund pleaded guilty to bribery and fraud as
part of a federal conspiracy case on Friday.
Fred Buenrostro admitted that he intentionally conspired
with a former California Public Employees' Retirement System
board member and others to accept bribes and devise a fraudulent
scheme involving Calpers' investments. He could face up to five
years in prison and a $250,000 fine.
Buenrostro, who served as the pension fund's CEO from 2002
to 2008, met Alfred Villalobos when he served on Calpers Board
from 1992 to 1995. Villalobos later founded a placement agency
called ARVCO that solicited investments by public pension funds
in private equity funds. ARVCO was paid based on the amount
invested, according to court documents.
Buenrostro admitted that he accepted gifts, money, travel
and other benefits from Villalobos during and after his tenure
as Calpers CEO in exchange for using Calpers investments to
benefit Villalobos. Villalobos hosted Buenrostro's wedding at
his home in Nevada, flew the Calpers chief to Dubai, Hong Kong,
and Macau, and provided valuable casino chips to now-former
Calpers board members, according to the plea agreement. In 2007,
Buenrostro started accepting cash bribes that eventually totaled
approximately $200,000 and were delivered to him at a downtown
Sacramento hotel in paper bags and a shoe box.
Villalobos' attorney, Bruce Funk, said on Friday his client
is "certainly still denying all these new allegations," and they
are waiting to see the evidence to support Buenrostro's claims.
Four months before Buenrostro left Calpers in 2008, he
signed "a series of fraudulent documents" at Villalobos' request
so ARVCO could invest in funds managed by the private equity
firm Apollo Group Management, Buenrostro wrote. In return,
Apollo wired ARVCO approximately $14 million in fees over two
years. Buenrostro admitted he provided Villalobos "intimate
access to CALPERS' confidential information" and "had done no
due diligence" consistent with his role as Calpers CEO.
In a prepared statement, Calpers condemned Buenrostro's
misconduct and ethical breaches, noting the $285 billion pension
fund "has taken aggressive steps to implement policies and
reforms that strengthen accountability and ensure full
An Apollo spokesperson declined to comment.
"The story he tells is sad, but true," said Bill Portanova,
attorney for Buenrostro. "He is ready to deal with the
consequences, whatever they may be."
Less than two months after Buenrostro stepped down as
Calpers CEO, Villalobos hired him as an ARVCO consultant, for
which he says he earned $387,000 in salary, a gold Rolex watch
worth more than $20,000, travel and other benefits.
From 2010 to 2012, Buenrostro answered inquiries in
connection with investigations from the U.S. Securities and
Exchange Commission, the U.S. Postal Inspection Service, the
Federal Bureau of Investigation and the U.S. Attorney's Office,
some of which Buenrostro says he answered falsely.
(Reporting by Robin Respaut and Jonathan Stempel; Editing by