The lawyer who led the investigation into the CalPERS bribery scandal has been sued for defamation by a private equity firm that was dumped by CalPERS as the probe unfolded.
Pacific Corporate Group of Coronado and its principal, Christopher Bower, sued Washington, D.C., attorney Philip Khinda and his law firm, Steptoe & Johnson.
The suit also targets Navigant Consulting Inc., a Chicago consulting firm that worked on the investigation.
The probe, which began in 2009, focused on former CalPERS board member Alfred Villalobos, who earned about $50 million in fees from investment firms that won business from the big pension fund. A state lawsuit, still pending, accuses Villalobos and former CalPERS Chief Executive Fred Buenrostro of fraud.
Pacific Corporate advised CalPERS for 20 years and was managing more than $1 billion for the pension fund when it was fired in 2010.
CalPERS never explained its decision. But The Bee reported that Villalobos, who was no longer on the board at the time, used his influence to keep Pacific Corporate from being fired as a fund adviser in early 2007 because of management instability issues. A few months later, Pacific Corporate advised CalPERS on two investments that earned Villalobos $17 million in fees.
In early 2011, Steptoe and Navigant released the findings of their probe. Among other things, they said Bower's connections to Villalobos "may have prevented (Bower) from acting in the best interests of CalPERS."
The report applauded CalPERS for firing the firm.
Pacific Corporate's lawsuit, filed Monday in Los Angeles Superior Court, called the report "unfounded hearsay."
The law firm issued a statement calling the suit "baseless" and added, "You cannot squelch free speech on issues in the public interest with retaliatory lawsuits."
A Navigant spokeswoman couldn't be reached for comment.
CalPERS, in a separate statement, said the reforms spawned by the investigation have led to "a more transparent, accountable and sound pension system."
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.
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