NEWS
Former CEO of CalPERS indicted in fraud case
20 March 2013
Category:
News, Global, USA
By Toby Garrod
The US Department of Justice has indicted former CEO of the California Public Employees’ Retirement System (CalPERS) Fred Buenrostro and former member of the CalPERS Board Alfred Villalobos on conspiracy charges in connection with a scheme to commit fraud, the department said on Monday (March 18).
After years of coordination between the authorities and CalPERS, the department indicted Mr. Buenrostro on five counts including fraud, mail and wire fraud, making false statements to the US government, and obstruction of justice. They were charged in connection with a scheme involving fraudulent documents relating to a US$3 billion investment by the retirement system in funds managed by private equity firm Apollo Global Management.
Mr. Villalobos was indicted on three counts including fraud, mail and wire fraud, and making false statements.
The private equity company had hired Mr. 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, said a report from Reuters.
A statement released by the US Attorney for the Northern District of California said that Mr. Villalobos and Mr. Buenrostro conspired to create fraudulent investor disclosure letters sent to Apollo. 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 Mr. Buenrostro retired from CalPERS and was hired by Mr. Villalobos to work for ARVCO.
The two men also made false statements to authorities investigating the disclosure letters, noting that the grand jury has charged Mr. Buenrostro with making a false statement and the obstruction of justice, according to the statement.
“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 long-awaited indictment of two former officials is another step on the road toward justice for California’s taxpayers, public employees and for all of CalPERS staff and stakeholders.
"This type of behaviour has no place in our organisation. We have enacted numerous reforms and policies to enhance transparency, to guard against future activities of this nature and to demonstrate our commitment to the highest levels of ethics. The work we have done has made CalPERS a stronger organisation,” he said.
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