SAN FRANCISCO, March 18 A former chief executive
of Calpers, the largest U.S. public pension fund, was indicted
on federal conspiracy charges in connection with a scheme to
commit fraud, the U.S. Department of Justice said on Monday.
Former Calpers CEO Federico Buenrostro was indicted by a San
Francisco grand jury, as was Alfred Villalobos, a former member
of the pension fund's board. They were charged in connection
with the scheme involving fraudulent documents related to a $3
billion investment by the retirement system in funds managed by
Apollo Global Management.
The private equity company had hired Villalobos' firm, ARVCO
Capital Research LLC, to provide placement agent services to
secure investment business at the pension fund, formally the
California Public Employee Retirement System. He and Buenrostro
conspired to create fraudulent investor disclosure letters sent
to Apollo, according to a statement released by the U.S.
Attorney for the Northern District of California.
Apollo paid ARVCO about $14 million in fees after receiving
the fraudulent letters, the statement said, adding that ARVCO
transmitted the last of the letters in June 2008, a few weeks
before Buenrostro retired from Calpers and was hired by
Villalobos to work for ARVCO.
The statement also said the two men made false statements to
authorities investigating the disclosure letters, adding that
the grand jury charged Buenrostro with making a false statement
and obstruction of justice.
The U.S. Securities and Exchange Commission last year
charged the two men with scheming to defraud Apollo.
Buenrostro's lawyer and representatives for Villalobos could
not be reach for comment.
Apollo and Calpers have cooperated with long-running federal
and state probes of placement agent activity at the pension
fund, and the investigations spurred it to increase its
oversight of placement agents.
"We are extremely pleased that law enforcement authorities
are moving to hold individuals accountable for activities which
violate the public trust," Rob Feckner, president of the Calpers
board, said in a statement.
Apollo said the allegations in the indictment are
"troubling" if true.
"Apollo has always followed best practices in handling its
placement agent relationships, and was not aware of any
misconduct engaged in by Mr. Villalobos during the time that he
worked with Apollo," the company said in a statement.