Investigations Deepen at CalPERS

(December 10, 2009) – The California Public Employees’ Retirement System (CalPERS) continues to fall under close scrutiny from federal officials over potential links between former officials and a corrupt financier.

The Securities and Exchange Commission (SEC) has asked convicted graft-giver and head of private equity firm Markstone Capital Group Elliott Broidy whether he had any contact with former CalPERS CEO Fred Buenrostro and former board member and current placement agent Alfred Villalobos, according to The Sacramento Bee. Broidy has pled guilty to paying New York state officials upward of $1 million in return for capital allocations from the funds.

The SEC’s investigation is a direct result of a probe started to investigate corruption in the New York State Common Retirement Fund. Taking aim at placement agents and other middlemen, the regulator has brought charges against multiple players in the Empire State [to see ai5000’s coverage of the placement agent scandal, click here ]. However, the probe has not stopped in New York: New Mexico, Illinois, and California funds have all been drawn into the probe that is looking to see whether pension officials improperly received kickbacks and favors from placement agents, alternative investment managers, and political contributors.

CalPERS itself already is investigating former officials who may have benefited from contact with placement agents and other groups that do business with the massive state retirement fund. Villalobos, for one, has earned upward of $60 million by acting as a placement agent since leaving the fund’s board in 1995. While both men admit to meeting Broidy, both deny that anything untoward occurred.