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Report finds CalPERS hurt by influence peddling of former executive, board members
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An investigation accuses a top official at CalPERS — California’s retirement fund for state employees — of taking kickbacks from a placement agency run by a former board member.
The aim was to steer investments to favored firms that charged inflated fees. That cut into CalPERS profits and the funds to pay for retirement benefits for 1.6 million Californians. CalPERS released details about the investigation at its annual meeting in Sacramento on Tuesday.
The report says money market firms paid $180 million to placement agents to entice CalPERS to invest in their funds.
One placement agent was Alfred Villalobos, a former CalPERS board member. He got CalPERS CEO Federico Buenrostro to pressure his investment managers to buy money market funds run by Villalobos’s clients. Villalobos later hired Buenrostro, paid him $300,000 a year and gave him a condo in Lake Tahoe.
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CalPERS investment managers complained about Buenrostro and Villalobos.
CalPERS Board of Administration hired lawyers to investigate.
Steptoe & Johnson's 56-page report concludes that CalPERS earned less money because the fees charged by the fund pushed by placement agents were higher than they should have been. The report says the “placement agents” corrupted investments “to the detriment of CalPERS.”
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