Stepping into a widening national probe of investment marketing agents, CalPERS on Wednesday launched a "special review" of a former board member who made $50 million in fees pitching deals to the pension fund.

The discovery of hefty fees paid to former board member Alfred Villalobos sparked a significant development in an ongoing investigation of placement agents – marketing middlemen hired by private equity firms and other money managers seeking investment dollars from public pension funds like CalPERS.

Villalobos, who served on CalPERS' board from 1993 to 1995, runs Arvco Financial Ventures, a placement agent firm in Stateline, Nev. As reported by The Bee in June, the Arvco firm is one of the most prolific placement agents in securing business from CalPERS, winning commitments totalling $3.3 billion since 2006.

The $199 billion California Public Employees' Retirement System has insisted that placement agents have no influence over the fund's investment decisions. But the volume of fees paid to a former board member led CalPERS to begin what it called a "special review."

"We believe it prudent to conduct a full review of the matters related to these recent disclosures to us," said CalPERS Chief Executive Anne Stausboll in a prepared statement.

A thick stack of records released by CalPERS shows the fees paid to Villalobos by three investment firms: Apollo Management of New York; Aurora Resurgence Capital Partners, chaired by well-known California business and political figure Gerald Parsky; and Ares Management, a Los Angeles firm.

The documents also show that Fred Buenrostro, who was CalPERS' CEO until June 2008, knew of the payment arrangements between Apollo and Villalobos' firm, Arvco.

Buenrostro has worked since August as a broker for Arvco, according to the Financial Industry Regulatory Authority.

State financial-disclosure records show that while he was CEO of CalPERS, Buenrostro accepted a $100 concert ticket and a $155 Kings ticket from Arcvo employees.

In an interview, Buenrostro said he has been "very clear" on honoring state conflict-of-interest laws.

He added that Villalobos' fees were typical for placement agents and weren't a secret around CalPERS. He said Villalobos has succeeded as a placement agent because his clients "have made good returns for CalPERS."

The 11 deals disclosed by CalPERS Wednesday have mostly lost money so far, according to CalPERS investment reports. But experts say that isn't unusual for private equity investments in their early stages. Two of the older deals, dating to 2003 and 2004, are profitable.

The CalPERS documents, meanwhile, show that two retired state senators, Richard Polanco and Bill Campbell, worked on deals for Villalobos, flying first class or business class. The fare was reimbursed by Apollo Management.

CalPERS in May adopted a disclosure policy on placement agents and asked its various investment partners for documents on their hiring of agents. Those documents yielded the discovery of the fees paid to Villalobos' firm, Arvco.

The review "won't be limited to Arvco, but Arvco started it," said CalPERS spokeswoman Pat Macht.

The pension fund hired Steptoe & Johnson, an international law firm based in Washington, to conduct the review, and will cooperate with the Securities and Exchange Commission and California Attorney General Jerry Brown, who are investigating the placement-agent business.

Placement agents generally work on commission, earning roughly 1 percent of the investment commitments they obtain from pension funds, such as CalPERS and the California State Teachers' Retirement System. The fees are paid by the investment firms, not the pension funds.

The agents' work became a big issue in March, when two New York political operatives were indicted in an alleged scheme to sell access to that state's public pension fund.

The scandal spread to the West Coast. Julio Ramirez Jr., a former salesman for Wetherly Capital Group, a well-connected Los Angeles placement agent firm, pleaded guilty in May in connection with the New York case. Wetherly has placed business with CalPERS and CalSTRS, too.

Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at sacbee.com/blogs. Andrew McIntosh of The Bee Capitol Bureau contributed to this report.