The former chief executive of North America’s largest pension fund has been charged with fraud and conspiracy over claims he fabricated placement agent documents for $3bn of private equity commitments.
Federico Buenrostro, who was in charge of CalPERS between 2002 and 2008, and former CalPERS board member Alfred Villalobos “covered up and lied to the Securities and Exchange Commission, the US Postal Inspection Service, and the Federal Bureau of Investigation about the authenticity of the investor disclosure letters” according to federal prosecutors in California.
CalPERS scrapped relationships with a string of placement agents in 2011 after it emerged in-house asset managers had handed over about $180m to win investments over the previous ten years.
Buenrostro, pictured, and Villalobos allegedly forged a letter from the pension fund to Apollo Global Management, which was acting as a placement agent, after the buyout house started requiring investor disclosure letters from LPs before payment of fees in 2007.
That letter was one of a series created by the pair according to prosecutors.
Buenrostro joined Villalobos’ placement agency Arvco the same day he retired from CalPERS in 2008.
Apollo has not been charged with any crime and has co-operated fully with investigators.
CalPERS said it “applauded” the indictments being handed down following years of investigation alongside the US Department of Justice.
Current CalPERS board president Rob Feckner said, “We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust.
“[This] is another step on the road toward justice for California’s taxpayers, public employees and for all of CalPERS staff and stakeholders.
“This type of behavior has no place in our organization. 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.”
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