Former CalPERS CEO gets prison time for bribery
June 1, 2016
The former CEO of the California Public Employees’ Retirement System (CalPERS) has received a 4.5-year prison sentence. Federico Buenrostro accepted more than $200,000 in bribes and tried to direct investments to an associate, who later committed suicide. [Wall Street Journal]
Buenrostro admitted to accepting bribes and gifts from Alfred Villalobos, a placement agent who helped hedge funds and other investment groups win CalPERS business. Buenrostro said Villalobos would deliver much of the money in paper bags and shoe boxes at the Hyatt Hotel across from the Capitol in Sacramento.
Villalobos, who served as a CalPERS board member from 1993 to 1995, earned about $50 million between 2005 and 2009 by working as a middleman between CalPERS and private equity clients. Prosecutors charged Buenrostro and Villalobos with conspiring to create phony documents that helped Wall Street equity firm Apollo Management land a $3 billion CalPERS investment deal.
In 2014, Buenrostro pleaded guilty to fraud and bribery charges. Last year, Villalobos was just weeks away from standing trial when he killed himself in Reno, Nevada.
On Thursday, U.S. District Judge Charles Breyer sentenced Buenrostro. Breyer said the case against Buenrostro was “seriously troubling” and that the former CalPERS chief committed a “spectacular breach of trust for the most venal of purposes, which is self-enrichment.”
Buenrostro has agreed to repay the state $250,000.
CalPERS is the nation’s largest public pension fund with about $290 billion in assets. The pension fund manages retirement and health benefits for many government workers in SLO County.