Thursday, June 2, 2016

CalPERS CEO Sentenced for PEU Activity (Bribes)


Zero Hedge reported:

Former California Public Employees' Retirement System (CalPERS) CEO Federico Buenrostro was sentenced Tuesday by a federal judge to four and a half years in prison for accepting more than $200,000 in bribes trying to steer investments.

Buenrostro pleaded guilty to fraud and bribery charges two years ago, saying he started taking bribes around 2005 to try and get CalPERS staff members to make investment decisions that helped Alfred Villalobos, an investment manager and former board member of the fund. The judge called the case "seriously troubling", and said it reflected a "spectacular breach of trust for the most venal of purposes, which is self-enrichment."
CalPERS owned 5% of The Carlyle Group at the time CEO Buenrostro started taking bribes to steer investments to former board member Alfred Villalobos, an investment placement agent.

Buenrostro acknowledged giving Villalobos access to confidential investment information and forging letters that enabled firms connected with Villalobos to collect a $14 million commission on $3 billion worth of pension fund investments.
Carlyle settled a New York pension pay to play investigation in 2009.  One has to wonder if this was accepted behavior among PEUs and their part owners.  A NYT article on Carlyle's $20 million settlement mentioned CalPERS Villalobos.

In 2007, Fernando Ferrer, the former Bronx borough president, introduced Mr. DiNapoli to Alfred Villalobos, who runs Arvco Capital, a Nevada placement agency. Seven months later, an Arvco client landed a $10 million investment from the state pension fund. Mr. DiNapoli’s staff has said he was not aware that Mr. Ferrer was a paid consultant to Arvco, and the relationship was never disclosed.
Even though CalPERS CEO Buenrostro started taking bribes in 2005 his most egregious behavior happened in 2008-2009.  Bloomberg reported:

After Calpers’ legal and investment offices declined to sign a letter, Villalobos and Buenrostro allegedly conspired to create a series of fraudulent letters that were transmitted to Apollo in 2008 and 2009, according to the indictment.
Villalobos committed suicide five weeks before his trial was to start in 2015.  Thus the voice that could have shed light on both sides of the CalPERS situation was silenced.  It's amazing how PEU money washing gets swept under a rug with a huge settlement.  It almost feels like a bribe to public officials to make their former bribes to public pension officials go away.