CalPERS Arvco Financial Payments Higher than Reported

November 4, 2009 ( - The amount paid to a former California Public Employees' Retirement System (CalPERS) board member for marketing money managers to the fund is higher than first thought, according to a Wall Street Journal news report.

The newspaper reported that Arvco Financial Ventures LLC, headed by former CalPERS board member Al Villalobos, received about $65 million in fees from money managers getting CalPERS mandates.

CalPERS announced the launch of a “special review” into money manager payments to Arvco and other firms, and officials said Villalobos’s firm received more than $50 million (see CalPERS to Examine Fees Paid to Adviser ). Villalobos was not accused of wrongdoing and has agreed to cooperate with the review.

Most of the Arvco payments — about $59 million — came from three firms: Apollo Management, Ares Management and CIM Group, the CalPERS documents show. The New York-based Apollo is a private-equity firm run by billionaire investor Leon Black. Ares and CIM are Los Angels-based investment firms run by brothers-in-law of Black, Anthony and Richard Ressler.

The remaining fees were paid by Aurora Capital Group, according to CalPERS documents. The investment firms have not been accused of wrongdoing.

CIM Group paid Arvco $9.6 million, the CalPERS documents show. In a statement the firm said it initially hired Arvco in 1998 as it was raising its first fund, but in 2000 terminated the relationship.

In a statement, Ares said it paid Arvco $1 million in connection with fundraising efforts for its first private equity fund but hasn’t used it or any similar firm in working with CalPERS because “it no longer required an introduction” to the pension fund.