CalPERS Applauds Indictment of Former CEO

March 18, 2013 ( – Federal officials have indicted former California Public Employees Retirement System CEO Fred Buenrostro on fraud charges.

The U.S. Department of Justice indicted Buenrostro on five counts including fraud, mail and wire fraud, making false statements to the U.S. government and obstruction of justice. In addition, former member of the CalPERS Board Alfred Villalobos was indicted on three counts including fraud, mail and wire fraud, and making false statements.  

The two are already facing charges by the Securities and Exchange Commission (SEC) in relation to a placement agent fee scheme. The SEC alleges that former CalPERS CEO Federico R. Buenrostro and his friend Alfred J.R. Villalobos fabricated documents given to New York-based private equity firm Apollo Global Management (see “SEC Charges Former CalPERS CEO in Placement Agent Fee Scheme”). Those documents gave Apollo the false impression that CalPERS had reviewed and signed placement agent fee disclosure letters in accordance with its established procedures. However, Buenrostro and Villalobos intentionally bypassed those procedures to induce Apollo to pay placement agent fees to Villalobos’s firms.     

“We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,” said Rob Feckner, President of the CalPERS Board. “This is a long-awaited indictment of two former officials is another step on the road toward justice for California’s taxpayers, public employees and for all of CalPERS staff and stakeholders.”  

In 2011, the CalPERS Board approved measures that put in place recommendations presented by Steptoe & Johnson LLP, the law firm that conducted a special review of the placement issue. Those recommendations addressed governance and operational matters at CalPERS, and in some cases require changes in State law (see “CalPERS Approves Placement Agent Policy Additions”).  

“This type of behavior has no place in our organization,” Feckner added. We have enacted numerous reforms and policies to enhance transparency, to guard against future activities of this nature and to demonstrate our commitment to the highest levels of ethics. The work we have done has made CalPERS a stronger organization.”