SAN FRANCISCO (AP) – The former head of the nation’s largest pension fund admitted Friday that he took bribes, including hundreds of thousands of dollars stuffed in paper bags and a shoe box, and helped an associate collect millions in a fraudulent investment scheme.
Fred Buenrostro Jr. pleaded guilty in San Francisco federal court to fraud and bribery charges stemming from his time as chief executive of the California Public Employees’ Retirement System from 2002 to 2008.READ MORE: No Indication Downtown Sacramento Church Fire Was Hate Crime, Investigators Say
In his plea agreement, Buenrostro said that in exchange for his help Alfred Villalobos, a former CalPERS board member, took him on a trip around the world, gave him casino chips and paid for his wedding in Lake Tahoe, California.
Villalobos denied the allegations through his attorney Friday.
Buenrostro’s statement was prompted by a yearslong investigation into the role of money-management firm middlemen, called placement agents, in helping clients win investment business from a California pension system that controls $300 billion.
CalPERS said the investigation has prompted it to take “aggressive steps to implement policies and reforms that strengthen accountability and ensure full transparency.”
Buenrostro said in his plea that he started taking bribes in 2005 to use his influence with CalPERS to make investment decisions to help Villalobos’ clients. He also said he gave Villalobos, a CalPERS board member in the mid-90s, access to confidential investment information.
The 64-year-old former executive said he forged letters allowing firms connected with Villalobos to collect a $14 million commissions on $3 billion pension fund investments. He said he started writing bogus investor disclosure letters after CalPERS legal and investment officials declined to authorize them.
Further, Buenrostro said after he left CalPERS and went to work for Villalobos that he accepted $50,000 to lie to federal investigators in 2010 about their relationship.READ MORE: Police: Woman Arrested In Roseville Had Mail That Was Stolen From At Least 25 People
Buenrostro faces five years in prison and a $250,000 fine when he is sentenced in January. In exchange for a lesser sentence, Buenrostro has agreed to cooperate with the continuing investigation of Villalobos, said Buenrostro lawyer William Portonova. “He got tired of lying,” Portonova said. “He’s ready to tell the truth.”
Villalobos has pleaded not guilty to fraud charges and other related counts. His attorney, Bruce Funk, said his client denies the claims contained in Buenrostro’s plea agreement. “If he’s truthful, there is nothing he can say that will hurt Mr. Villalobos,” Funk said.
Buenrostro and Villalobos, 70, also face two government lawsuits.
The state attorney general sued in 2010, saying Buenrostro and Villalobos, along with other former pension board and staff members, participated in kickback scheme.
At that time, the attorney general obtained a court order freezing assets of Villalobos and his company in an attempt to recover more than $40 million in commissions. Villalobos filed for bankruptcy later in 2010. His assets included 20 bank accounts, two Bentleys, two BMWs, a Hummer, art worth more than $2.7 million and 14 properties in California, Nevada and Hawaii. None of Buenrostro’s assets were seized.
State attorney general spokesman Nick Pacilio said a trial is scheduled for Sept. 8 in San Francisco Superior Court.
The Securities and Exchange Commission has also filed a lawsuit in 2012, which is still pending.
In a related sanction, the state’s campaign watchdog, the Fair Political Practices Commission, fined other executives and investment managers in 2011 for failing to report gifts that included food, wine and baseball and Rose Bowl tickets.MORE NEWS: Suisun City Fire Helps Coast Guard In Late-Night Rescue In Slough
Copyright 2014 The Associated Press.