Ex-CEO of CalPERS pleads not guilty to federal charges

dkasler@sacbee.comMay 9, 2013 


Fred Buenrostro allegedly sent fake letters to help a financial agent.

Fred Buenrostro, former chief executive at CalPERS, has said for years he had nothing to do with the bribery scandal that engulfed the pension fund.

On Wednesday, he made his denial in a criminal courtroom.

Buenrostro pleaded not guilty to conspiracy and obstruction of justice charges in federal court in San Francisco.

The plea came nearly two months after Buenrostro and his longtime friend Alfred Villalobos were indicted by a federal grand jury. Villalobos entered his not guilty plea on April 9.

The two are free on bond.

Villalobos was a "placement agent" who earned millions in fees when his clients – private equity firms – secured investments from the California Public Employees' Retirement System.

State officials charged in a 2010 lawsuit that Villalobos bribed Buenrostro to steer investments to those clients. Among other things, the suit said Villalobos offered Buenrostro a job and a Lake Tahoe condo if he'd quit CalPERS – a promise that was fulfilled in 2008. The criminal case isn't about the alleged bribes. Instead, prosecutors say Buenrostro sent fake letters with CalPERS' logo to one of Villalobos' top clients, Apollo Global Management.

The letters said CalPERS was aware Villalobos would earn a commission if CalPERS did business with Apollo. The private equity firm was insisting on the letters.

Prosecutors say Villalobos and Buenrostro lied about the letters to FBI agents and other investigators.

Meanwhile, a San Diego area investment firm that was entangled in the scandal has dropped its defamation lawsuit against the Washington, D.C., lawyer who investigated the matter for CalPERS.

Pacific Corporate Group and principal Christopher Bower dropped their suit against attorney Philip Khinda, his firm Steptoe & Johnson, and Navigant Consulting Inc.

CalPERS in 2010 fired Pacific Corporate, which was managing $1 billion of the pension fund's money, apparently because of its ties to Villalobos. A report by Steptoe and Navigant said Pacific Corporate may not have acted in CalPERS' best interests.

Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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