(March 26, 2010) – Justice Department investigators in Los Angeles have been looking into potential illegal investment transactions of public pension funds, including the $200 billion  California Public Employees’ Retirement Fund (CalPERS), according to the Wall Street Journal.

From New York to California, criminal scrutiny into pay-to-play probes – where investment decisions are made sacrificing best results in favor of profitable investment contracts – have become far-reaching in scope.

According to the Wall Street Journal, the millions of dollars in illegal payments were possibly made to influence decisions on where to invest public pension-fund money at CalPERS, the nation’s largest pension fund. However, the investments under scrutiny account for a small percentage of the fund’s total portfolio. A CalPERS spokeswoman told the newspaper that CalPERS has an ongoing internal investigation of its own while they also cooperate with outside investigative agencies examining the fund.

CalPERS faced criticism last year after reports that a placement firm headed by a former board member made more than $58 million for representing investment firms at the fund. Since then, CalPERS has hardened its stance on placement agents or pension-fund middlemen. It has sought details about placement agents hired by its investment partners, the investments they promoted and the fees they were paid. Additionally, the fund is backing legislation to regulate middlemen as lobbyists, which would cause the activities of placement agents to come under heightened scrutiny.

In other regions, six people have pleaded guilty in New York following Attorney General Andrew Cuomo’s pay-to-play investigation. The Securities and Exchange Commission (SEC) has been investigating pension fund scandals in both New York and California.