Fred Buenrostro

Fred Buenrostro, a former CEO of the California Public Employees’ Retirement System (CalPERS), plead guilty in federal court last week to conspiracy to commit bribery and fraud. Buenrostro was the CEO of CalPERs from 2002 to 2008 and admitted to engaging in numerous corrupt and illegal activities while managing the second largest pension fund in America with an investment portfolio worth $291 billion.

Part of the plea deal required Buenrostro to publicly admit to his misdeeds which included steering part of CalPERS funds to private equity firms that paid off Alfred Villalobos, a friend of Buenrostro. Villalobos received close to $50 million by serving as CalPERS “placement agent.”

In return Buenrostro got a $300,000 job from Villalobos upon leaving CalPERS and an assortment of other payoffs:

  • The receipt of $200,000 in cash from Villalobos — stuffed into shoe boxes and paper bags over a series of three meetings – in exchange for confidential CalPERS information and influence in directing CalPERS to invest in Villalobos’ clients.
  • The receipt of a $50,000 check from Villalobos, in exchange for Buenrostro refusing to testify in an SEC investigation over placement agent corruption.
  • The receipt of a variety of first-class airline tickets and other luxury travel perks (some of which were for business travel while Buenrostro was on the job with CalPERS).
  • The receipt of casino chips, some of which also went to Buenrostro’s wife and unidentified ex-CalPERS board members.
  • Villalobos paid for Buenrostro’s 2004 wedding (which, as previously reported, was held at Villalobos’ home in Lake Tahoe).

Banksterism has its perks. The amount of dirty money and favors being exchanged here puts a crooked city councilman to shame. And there apparently is more to come as the 64 year old Buenrostro may implicate others in order to avoid spending up to five years in prison.

The big picture is equally distressing as more and more pension funds look to private equity firms and other “alternative investment vehicles” to get their needed returns to pay their retirees. With private equity firms and hedge funds now taking over the game, the opportunities for corruption are only increasing.

Photo from CalPERS under public domain.