Fred Buenrostro, the former CEO of the California Public Employee Retirement System (CalPERS), has pleaded guilty to conspiracy to commit corruption and fraud charges stemming from a conspiracy to trade official acts for cash and benefits.
He admitted to conspiring with Alfred J. Villalobos, founder and operator of ARVCO Capital Research. Buenrostro acknowledged in court that he understood that Villalobos operated ARVCO as a placement agent that solicited investments by public pension funds into private equity funds. Buenrostro also admitted that he understood that ARVCO was typically paid an agreed-upon fee based on the percentage of the total dollar amount invested by the public pension fund.
He admitted that he began receiving secret benefits from Villalobos no later than 2005 for the purpose of influencing him in the exercise of his powers and duties as CalPERS CEO.
“Buenrostro admitted Villalobos provided him approximately US$250,000, as well as gifts, domestic and international travel, meals, entertainment, payment for Buenrostro’s wedding and his subsequent employment at ARVCO after he left CalPERS in May of 2008,” according to a statement from the Federal Bureau of Investigation.
“In exchange, Buenrostro admitted that he attempted to influence the CalPERS investment staff and board to the benefit of Villalobos and his current and prospective clients, and provided Villalobos with access to CalPERS’ confidential information relating to investments, internal deliberations and other proprietary matters.”
As part of the conspiracy, Buenrostro admitted that he and Villalobos created fraudulent documents in order to secure fees for ARVCO from private equity firm Apollo Global Management.
Buenrostro was charged by superseding information with a single count of conspiracy and pleaded guilty to that charge in an agreement with the government that included his promise to co-operate in future investigations. Villalobos is charged in a related indictment and previously entered a plea of not guilty to all charges. Both defendants are currently released on bond.
Buenrostro is scheduled for sentencing next January.
“CalPERS looks forward to justice being served in this case and for the individuals involved to be held accountable for their actions,” says a statement from CalPERS. “We will continue to co-operate with the prosecutors and others in law enforcement and are grateful for their dedicated efforts on this matter.”