* SEC says ex-CEO, ex-board member fabricated documents
* Two charged with scheming to defraud a firm of $20 mln
SAN FRANCISCO, April 23 A former chief executive
of Calpers, the biggest U.S. public pension fund, and a former
board member were charged by federal regulators on Monday with
scheming to defraud Apollo Global Management, a private
equity firm, of more than $20 million in placement fees.
The U.S. Securities and Exchange Commission said that
Federico Buenrostro, a former chief executive of the California
Public Employees' Retirement system, and Alfred Villalobos, a
friend and former board member who became a placement agent,
fabricated documents as part of the fraud.
Villalobos is also a former deputy mayor of Los Angeles.
Investment firms hire placement agents to help them land
business at pension funds.
According to the SEC, Buenrostro and Villalobos, gave Apollo
Global the impression that Calpers, which has $235 billion in
assets, had reviewed and signed placement-agent fee disclosure
letters in accordance with its procedures.
"In fact, Buenrostro and Villalobos intentionally bypassed
those procedures to induce Apollo to pay placement agent fees to
Villalobos's firms," the SEC said in a statement. "The false
letters bearing a fake Calpers logo and Buenrostro's signature
were provided to Apollo, which then went ahead with the
Villalobos generated more than $70 million in placement
agent fees over approximately a 10-year period, at least $58
million of which was related to Calpers' investments, according
to the SEC.
Buenrostro served as Calpers' CEO from 2002 to 2008.
Buenrostro and Villalobos have been the focus of
long-running probes by the SEC and the California attorney
general's office regarding placement agent activity at Calpers,
which has been cooperating in the investigations.
Calpers at the same time has been implementing changes to
better police placement agents.
"We condemn in the strongest way possible the alleged
misconduct of these individuals, and pledge to continue working
with all law enforcement authorities investigating these
issues," Rob Feckner, president of the Calpers board, said in a
Calpers Chief Executive Anne Stausboll said the fund
continues to assist authorities with its probes of placement
Apollo is also cooperating with authorities, a spokesman for
the firm, Charles Zehren, said.
"The allegations described in the complaint filed today by
the SEC, if true, are troubling," Zehren said.
"Apollo believes it follows best practices in handling its
placement agent relationships, and only learned of the alleged
misconduct while cooperating with the regulatory agencies
investigating this matter," Zehren added.
The SEC said it seeks an order requiring Buenrostro,
Villalobos, and Villalobos' firm to disgorge any ill-gotten
gains, pay financial penalties and be permanently enjoined from
violating the antifraud provisions of federal securities law.
The SEC filed its complaint in U.S. District Court, District
Representatives of Villalobos could not be reached for
comment, but he has denied any wrongdoing.
Buenrostro's lawyer, Bill Kimball, said the former Calpers
CEO "strongly denies any allegation that he was involved in any
fraud or illegal conduct."
The office of California Attorney General Kamala Harris had
no comment on the SEC's action, but said a case management
hearing regarding the state's fraud lawsuit against Villalobos
and Buenrostro is scheduled for early May in state court in Los