STATELINE, Nev. – When Fred Buenrostro, then the chief executive of California's giant public employees' pension fund, was looking for a place to get married, he accepted an offer to hold the wedding at the home of good friend and former CalPERS board member Alfred J. Villalobos.

Villalobos hosted the event at his Lake Tahoe mansion on Nov. 6, 2004. "It's what a friend would do for a friend," he later told The Bee.

Villalobos was more than just an ordinary friend. He stood to gain millions by introducing clients to officials at the California Public Employees' Retirement System.

Villalobos recently emerged as a central figure in an ongoing investigation of placement agents – brokers who help private-equity firms obtain big investment dollars from CalPERS and other public pension funds.

Two weeks ago, CalPERS hired Washington law firm Steptoe & Johnson to conduct a "special review" of Villalobos' activities, revealing that his placement-agent firm, Arvco Financial Ventures, earned $50 million in commissions helping his clients secure investments from the pension fund since 2006.

Buenrostro left his job as CalPERS chief executive officer in June 2008 and now works for Villalobos' firm as a broker.

In a recent interview, Buenrostro acknowledged his close relationship with Villalobos but said their ties didn't influence CalPERS' investments.

CalPERS has said its investment decisions aren't swayed by placement agents. When asked if CalPERS knew that Villalobos hosted Buenrostro's wedding, or whether that posed a conflict of interest, spokeswoman Pat Macht said in an e-mail that "relationships related to placement agents are part of the full examination being conducted by Steptoe and Johnson."

On his state conflict-of-interest filings for 2004, Buenrostro didn't report receiving any gifts from Villalobos or Arvco.

In an interview last week, Buenrostro said Villalobos paid for the wedding, and then he subsequently reimbursed him – without ever seeing the actual bills. He declined to say how much he paid.

In any event, Buenrostro said he broke no state law.

"Entertainment in AJ's home is not a reportable expense or a gift," he said. "AJ was kind enough to lend me his home for a small, private event where I invited my family. I appreciated the offer of using his personal home."

Villalobos, who served with Buenrostro on the CalPERS board from 1993 to 1995, hosted the wedding for Buenrostro and Melissa K. Nevis, according to Douglas County, Nev., marriage documents. Villalobos signed the marriage certificate as an official witness.

During the reception at Villalobos' 9,000-square-foot home, Buenrostro thanked Villalobos for hosting the affair, according to someone familiar with the event.

Phone messages to Villalobos went unreturned. Two Bee reporters who visited Arvco's Stateline headquarters on Highway 50 about a half-mile from his mansion were told by a secretary that he was absent.

Roman Porter, executive director of the state Fair Political Practices Commission, said in-home hospitality provided to a state official, including a dinner, beverages and occasional lodging, isn't subject to reporting requirements and gift limits.

But Porter said the regulation intends only to exempt an occasional dinner party or overnight stay, not a businessman lending his mansion to a senior state official to host a private wedding and reception.

"The FPPC may have to look at this regulation to ensure that it properly describes the exemption," Porter added. He said he found no record of Buenrostro or Villalobos seeking ethics advice on the matter.

In 2004, a senior state official like Buenrostro could accept up to $340 a year in gifts of any kind from a single source, Porter added.

Buenrostro said he and Villalobos have been longtime friends but their relationship didn't give Arvco or its clients the inside track on securing investments from CalPERS.

He said he didn't invite anyone from CalPERS to the wedding.

While the CalPERS investigation will go beyond Villalobos' role, his firm has been one of the most successful at obtaining business from the $199 billion pension fund. Arvco's clients have obtained investment commitments totalling approximately $3 billion since 2006.

Call Andrew McIntosh, Bee Capitol Bureau, (916) 321-1215. Call The Bee's Dale Kasler at (916) 321-1066.