A former state senator, facing a lawsuit from a bankruptcy trustee, has agreed to repay $25,000 he borrowed from a businessman who later was accused of bribing CalPERS officials.
Former Sen. Richard Polanco, who is now a lobbyist, has agreed to repay the loan to the bankruptcy estate of late Nevada businessman Alfred Villalobos. Records filed in U.S. Bankruptcy Court in Reno say Polanco agreed to make an initial payment of $5,000, followed by $1,500 monthly payments.
Polanco, a Los Angeles Democrat, went to work for Villalobos after leaving the Legislature in 2002, helping him obtain CalPERS investment deals for private equity firms. Villalobos earned roughly $50 million in commissions securing investments from the California Public Employees’ Retirement System.
Villalobos filed for bankruptcy protection after California officials sued him in 2010, accusing him of bribing former CalPERS Chief Executive Fred Buenrostro and others in an effort to steer investment dollars to his clients. Buenrostro and Villalobos were indicted on criminal charges in 2013, and Villalobos was found shot to death six months ago in Reno in an apparent suicide.
Buenrostro pleaded guilty to taking bribes and is scheduled to be sentenced Dec. 10.
Despite his death, Villalobos’ financial dealings are still being investigated, and the court-appointed trustee handling his bankruptcy is pursuing various claims to raise money for his creditors. The trustee, Christina Lovato, sued Polanco in February, saying the former senator was refusing to repay the loan Villalobos made in 2008.
“Defendant Polanco agreed to repay the loan upon demand,” the complaint said. “Although demand has been made, the loan has not been repaid.” Now that Polanco has agreed to repay the loan, the trustee has dropped the lawsuit.
CalPERS records show that Polanco and another retired state senator, Bill Campbell, helped Villalobos secure a $520 million CalPERS investment for private equity firm Apollo Global Management in 2005. Apollo paid Villalobos a $10 million commission on that deal, although it wasn’t known how much Polanco and Campbell received.
Polanco, the former chairman of the Legislature’s Latino Caucus, couldn’t be reached for comment Tuesday.