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. 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.
The false letters bearing a fake CalPERS logo and Buenrostro’s signature were provided to Apollo, which then went ahead with $20 million in payments to Vallalobos firm, ARVCO Capital Research.
“Buenrostro and Villalobos not only tricked Apollo into paying more than $20 million in placement agent fees it would not otherwise have paid, but also undermined procedures designed to ensure that investors like CalPERS have full disclosure of such fees,” said John M. McCoy III, associate regional director of the SEC’s Los Angeles Regional Office.
The SEC seeks an order requiring Buenrostro, Villalobos and ARVCO to disgorge any ill-gotten gains, pay financial penalties and be permanently enjoined from violating the antifraud provisions of the federal securities laws.
Both Buenrostro and Villalobos have been sued by the California Attorney General (see “’Special Review’ Outlines Private Placement Problems at CalPERS”).
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