The man who led the California Public Employees’ Retirement System (CalPERS) from 2002 to 2008 pleaded guilty in a San Francisco federal court to a charge of conspiracy to commit bribery and fraud on July 11.
Under an agreement to cooperate with federal prosecutors, former-CEO Fred Buenrostro revealed the extent of the alleged corruption at the top of the pension fund that had been placed in his care.
“He is starting a new chapter in his life. He is a 64-year-old man who is ready to tell all,” said Buenrostro’s attorney, William Portanova, the San Francisco Chronicle’s sister website, SFGate reported.
The deal saw Buenrostro agree to testify against his friend and former CalPERS board member Alfred Villalobos, who is being pursued by federal prosecutors on similar charges. Villalobos was a placement agent for Apollo Global Management at the time of the crime. He has denied any wrong-doing and is set to face trial once a court date is scheduled.
“He is a 64-year-old man who is ready to tell all,” said Buenrostro’s attorney.
The pair was charged last year with conspiracy to create “fraudulent investor disclosure letters in order to satisfy Apollo’s record-keeping obligations under the securities laws and regulations and to ensure [Villalobos’ firm’s] receipt of commission fees from Apollo,” according to indictment papers.
Villalobos received about $14 million from Apollo for handling a $3 billion investment by CalPERS from 2008 and 2009, the indictment said.
In court last week, the former CalPERS CEO said he had accepted $200,000 in cash, along with a series of other bribes including casino chips, a high-end trip around the world, and a high-paying job after leaving the pension fund.
In his written plea agreement, Buenrostro said Villalobos paid him in three instalments in 2007, “all of which was delivered directly to me in the Hyatt hotel in downtown Sacramento across from the Capitol,” The Sacramento Bee reported.
“Villalobos told me to be sure to ‘shuffle’ the currency before making any deposit, as the bills were new and appeared to be in sequential order,” Buenrostro wrote.The cash was allegedly delivered in shoe boxes and paper bags.
Buenrostro added that Villalobos advised him to be careful when depositing the cash in order to avoid detection by banking authorities.
“Villalobos told me to be sure to ‘shuffle’ the currency before making any deposit, as the bills were new and appeared to be in sequential order,” Buenrostro wrote.
Buenrostro took up a $25,000-a-month job with Villalobos after quitting CalPERS, but this was terminated after the company filed for bankruptcy two years later.
Additional alleged bribes came in the form of Buenrostro’s 2004 wedding at Villalobos’ Lake Tahoe mansion, paid for by the owner, and a $50,000 loan from Villalobos in return for Buenrostro’s refusal to testify before the Securities and Exchange Commission about the affair.
The former CEO said the pair had also destroyed records that would prove the extent of the corruption.
Had Buenrostro gone to trial and been convicted on all charges, he faced up to 40 years in prison. The conspiracy charge to which he admitted carries a five-year maximum penalty. Prosecutors are yet to make sentencing recommendation, but agreed to ask for a reduced sentence based on Buenrostro’s “truthful cooperation,” said his lawyer Portanova, according to TheSacramento Bee.
Villalobos, now 70 years old, was not in court on Friday due to ill health, but he listened by telephone, it was reported.
He continues to deny all charges, according to his lawyer, Bruce Funk, who added: “We don’t think there’s any truthful information [Buenrostro] could give that could affect Mr. Villalobos.”
For its part, CalPERS released a statement: “We condemn the misconduct and ethical breaches admitted today by Mr. Buenrostro. The violation of the sacred trust of our members, employers, and the public can’t be tolerated, and that trust must never be compromised.”
It added that CalPERS had “taken aggressive steps to implement policies and reforms that strengthen accountability and ensure full transparency”.
The felony guilty plea could mean that Buenrostro forfeitures a portion of his CalPERS pension, a fund spokesman said.
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