Politics & Government

Former CalPERS board member Chuck Valdes, caught in ethical tangles, dies

Charles P. “Chuck” Valdes was one of the most powerful figures at America’s largest public pension fund. But he led a troubled private life, dogged by bankruptcies and assorted ethical problems, and he’d been linked to a massive bribery scandal when he retired from public service four years ago.

Valdes, who served for two decades on the governing board of CalPERS, died Sept. 2, Sacramento County coroner’s officials confirmed Monday. His death came a week after his housemate and domestic partner, Clarence Munson, 55, was arrested on charges that he had deliberately injured the 74-year-old Valdes.

Munson’s lawyer, Roderick MacKenzie, said he believes Valdes’ death isn’t connected to the charges against Munson. He added that Valdes had been in poor health, with a heart condition and diabetes, and was found dead in a bathroom of their home in Carmichael.

Jennifer Becker, deputy supervising coroner, said the cause of death is still pending.

MacKenzie said Munson plans to plead not guilty at a hearing Tuesday in Sacramento Superior Court.

“I expect the charges to be dismissed,” MacKenzie said. “There’s really no reason now in my opinion to hold him. ...Who’s going to testify if there’s nobody who saw it?”

Rod Norgaard, supervising deputy district attorney, said his office is awaiting word from the coroner on Valdes’ cause of death. He added that no law enforcement agency has contacted the DA’s office about the death. “We have not been notified that a criminal agency is involved,” Norgaard said.

Munson, who’s being held in lieu of $110,000 bail, declined to be interviewed Monday afternoon at the Sacramento County main jail.

He has been charged with battery, corporal injury to a spouse or cohabitant, and elder abuse. The criminal complaint includes few details of the Aug. 24 incident and only refers to the victim as a 74-year-old “Charles Doe” MacKenzie confirmed that the alleged victim was Valdes.

It was the seventh time Munson had been arrested since 1986, according to court records. The resulting charges ranged from drug counts to theft.

CalPERS had no comment on Valdes’ death.

A retired Caltrans lawyer, Valdes was under an ethical cloud when he left the board of the California Public Employees’ Retirement System in January 2010, after his final term expired.

Although never charged with any wrongdoing, Valdes had been linked in court records and other documents to the bribery case involving former CalPERS Chief Executive Fred Buenrostro and another former board member, Alfred Villalobos.

A still-pending lawsuit filed by state officials said Villalobos bribed Valdes, Buenrostro and others at CalPERS in a scheme to steer the pension fund’s investment dollars to Villalobos’ Wall Street private-equity clients. Among other things, the suit said Valdes accompanied Buenrostro and Villalobos on a 2006 international junket paid for by Villalobos. He wasn’t a defendant in the suit, however.

Court records show that Valdes invoked his Fifth Amendment right against self-incrimination 126 times when questioned by state lawyers during a closed-door deposition in August 2010.

Buenrostro recently pleaded guilty in U.S. District Court in San Francisco to accepting bribes from Villalobos. He is free on bail while he awaits sentencing. Villalobos has pleaded not guilty.

During his 20 years on the CalPERS board, Valdes spent 13 years as chairman of the investment committee, arguably the most powerful committee in the entire organization.

CalPERS records show that he was an early advocate for business deals proposed by Villalobos.

In 2000, the investment committee was considering investing tens of millions of dollars with CIM Group, a Los Angeles real estate firm that had hired Villalobos to market its proposal to the pension fund. The CalPERS investment staff spent months vetting the proposed deal when an angry Valdes weighed in.

At a meeting of the investment committee in May 2000, Valdes accused the staff of dragging its feet on the CIM deal.

“The reason ... is the association of Mr. Alfred R. Villalobos,” he said, according to a transcript of the meeting. “No investment opportunity should be sat on for 18 months just because you don’t happen to like the individual involved.” CIM ended up firing Villalobos but got the investment from CalPERS.

In 2009, Valdes was fined $12,500 for violating state campaign finance laws in a matter connected to Villalobos. The state Fair Political Practices Commission said Valdes accepted $38,600 in donations for a 2005 CalPERS board election campaign that was already over. Several of the donations exceeded the $3,300 limit for a CalPERS campaign. Some of the money came from employees or associates of Villalobos, according to the FPPC.

Valdes filed for bankruptcy twice in the 1990s and was slapped with a judgment in 2006 over an unpaid $18,000 credit card bill. A lien was placed on his Carmichael home, and a collection agency obtained a court order garnishing part of his Caltrans wages.

Among his expenses: In 2008, he spent $13,000 bailing Munson out of jail on a charge related to drug possession, according to a Bee investigation. Munson was eventually placed on probation, according to Sacramento County court records.

A 2011 investigative report on the bribery case commissioned by CalPERS mentioned Valdes more than 70 times and said his financial troubles left him vulnerable to influence-peddling. Among other things, the report said Valdes accepted hundreds of dollars worth of chips from Villalobos during trips to casinos near Villalobos’ Lake Tahoe mansion.

Besides the global junket with Buenrostro and Villalobos, the report said Valdes attended the Oscars in 2005 and 2006, and it wasn’t clear who paid.

Valdes’ financial troubles “reportedly prevented Valdes from being issued a CalPERS credit card ... making his CalPERS-related travel arrangements more complex and cumbersome,” said the report, written by Washington securities lawyer Philip Khinda. “These personal financial setbacks may also have made him susceptible to influence by those with business interests involving CalPERS.

“His actions were inconsistent with the standards of care and loyalty expected of CalPERS board members and public servants entrusted to protect pension fund assets,” the report added.

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