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 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.
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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 transparency."
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 Dan
Grebler)
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