Former CalPERS board member Alfred Villalobos was indicted Thursday on bribery and other charges as the federal government broadened its case against the businessman at the center of the biggest scandal in memory at the giant pension fund.
A federal grand jury indicted the Nevada businessman on three felony charges, accusing him of using cash in an effort to steer pension fund business to his Wall Street clients. The new charges came less than a month after former CalPERS Chief Executive Fred Buenrostro admitted taking a series of bribes from Villalobos, including $200,000 in cash during clandestine meetings at the Hyatt hotel across the street from the Capitol.
The two men were indicted more than a year ago on charges of falsifying documents to make sure that Villalobos, a “placement agent” representing investment firms seeking CalPERS’ business, got paid his commissions.
In July, Buenrostro pleaded guilty to the broader array of charges, and federal prosecutors said they would move to intensify the charges against Villalobos. Thursday’s indictment fulfills that promise.
Villalobos has pleaded not guilty to the earlier charges, and his lawyer, Bruce Funk, said last month that he would fight any new charges brought by the government as well. Funk declined to comment Thursday on the new indictment.
The new indictment represents essentially the flip side of the facts contained in Buenrostro’s guilty plea. Prosecutors said Villalobos gave his long-time friend $200,000 in cash, plus a $50,000 check to buy his silence as investigators began scrutinizing their activities. The alleged bribes also included “entertainment, travel, lodging, jewelry, casino chips and other benefits in kind,” according to the indictment.
While the new indictment widens the scope of the allegations against Villalobos, it doesn’t bring the threat of added prison time. If convicted on all charges, the 70-year-old Villalobos could be sentenced to up to 30 years in prison, the same as under the original indictment.
Villalobos remains free on bond while the case is pending.
Buenrostro, who also remains free on bond, faces up to five years in prison at his sentencing next January in U.S. District Court in San Francisco.
Villalobos, who served on the CalPERS board in the early 1990s, earned roughly $50 million in commissions helping his private equity clients get investments from the California Public Employees’ Retirement System.
An investigative report commissioned by CalPERS concluded that Villalobos’ bribes probably didn’t sway the pension fund’s investment officers. But the private equity firms probably inflated the investment-management fees they charged CalPERS to make up for the hefty fees they were paying Villalobos.