Politics & Government

Alfred Villalobos, fixture in CalPERS corruption scandal, apparently commits suicide

Alfred Villalobos, accused of bribing the former chief executive of CalPERS, was scheduled to go on trial next month, but apparently fatally shot himself Tuesday.
Alfred Villalobos, accused of bribing the former chief executive of CalPERS, was scheduled to go on trial next month, but apparently fatally shot himself Tuesday. Whittier College

In failing health and facing up to 30 years in prison for his role in the CalPERS bribery scandal, Alfred Villalobos apparently committed suicide Tuesday, weeks before he was scheduled to go on trial.

Villalobos’ attorneys, appearing at a pretrial hearing in U.S. District Court on Wednesday, disclosed that Villalobos died the day before in Reno. His death ends the government’s criminal case against the Nevada businessman – and largely closes the books on a corruption scandal that roiled the nation’s largest public pension fund.

Reno police spokesman Tim Broadway said the death is being treated as an apparent suicide. He said Villalobos is believed to have fatally shot himself sometime Tuesday afternoon at an indoor public shooting range in Reno. The investigation is continuing, Broadway said, and he had no additional details.

Villalobos’ death leaves one matter outstanding in the criminal case stemming from the CalPERS corruption probe. The pension fund’s former chief executive, Fred Buenrostro, who has admitted taking more than $250,000 in bribes from Villalobos, is scheduled to be sentenced in May for his crime.

Villalobos, 71, had been in poor health for some time. His lawyer, Bruce Funk, had been preparing to ask the judge to delay Villalobos’ trial, set for next month, because of Villalobos’ illness. Instead, he told the judge that Villalobos was dead.

Funk wouldn’t comment on the suicide report.

“He had a prolonged illness that was quite painful,” Funk said after the brief court hearing. “He was very much looking forward to exonerating himself.”

Buenrostro declined comment about his longtime friend when reached by The Sacramento Bee. His lawyer, William Portanova, said Villalobos’ death “won’t have any effect on Fred’s case.”

Buenrostro, who is free on bond, is expected to get a five-year sentence after pleading guilty last July to accepting bribes.

“Fred early on made a conscious decision to tell the truth ... and that is unchanged,” Portanova said. “He’s a different man.”

Portanova added that Buenrostro had spent the past several months feeding prosecutors information about Villalobos and had been “instrumental in building the case” against the Nevada businessman.

Prosecutor Timothy Lucey, an assistant U.S. attorney, rushed out of the courtroom as the hearing ended and couldn’t be reached for comment afterward.

Villalobos was accused of bribing Buenrostro to gain favor for clients of his investment firm. An investigative report commissioned by CalPERS concluded that Villalobos’ bribes didn’t actually steer any pension fund dollars to his clients, but his work probably undermined CalPERS’ negotiators and enabled the investment firms to get more favorable deal terms. That likely cost CalPERS millions of dollars in additional management fees paid to those firms, said the report, which was written by Washington securities lawyer Philip Khinda.

Most of the investments brokered by Villalobos have been profitable for CalPERS.

Villalobos’ activities formed the cornerstone of a corruption case that rocked CalPERS when it unfolded in 2009. Its reputation damaged, the pension fund instituted reforms, including a ban on commission payments to “placement agents” such as Villalobos, who help investment clients do business with CalPERS.

Brad Pacheco, spokesman for CalPERS, issued a terse statement Wednesday that didn’t mention Villalobos, who was a CalPERS board member in the early 1990s. Pacheco said CalPERS remains “focused on supporting law enforcement authorities as they pursue bringing to justice those who broke the law.”

Former Assemblyman Dave Elder, who represents some public employee unions before CalPERS, called Villalobos’ death unfortunate because the whole story of his criminal behavior won’t come out now. “It’s very unfortunate that this didn’t go to trial,” Elder said.

After leaving the CalPERS board, Villalobos returned to Sacramento repeatedly, representing Apollo Global Management and other big-name private equity firms seeking investment dollars from the big pension fund. His activities rankled some officials on the CalPERS investment staff but he cultivated key allies, including Buenrostro and longtime board member Charles Valdes, who died recently.

There was no evidence that Villalobos’ clients were aware of any wrongdoing.

Prosecutors said Villalobos gave Buenrostro more than $250,000 in bribes. That included $200,000 in cash, delivered in three installments at the Hyatt hotel across the street from the Capitol in 2007, and a $50,000 check to buy Buenrostro’s silence as investigators closed in.

In addition, prosecutors said Villalobos paid for Buenrostro’s wedding and took Buenrostro and Valdes on an all-expenses-paid junket to Europe and Asia in 2006. Buenrostro also admitted taking casino chips and other favors from Villalobos, who won and lost hundreds of thousands of dollars at Lake Tahoe casinos over the years.

Valdes was never charged with any wrongdoing.

Court records also show that Villalobos promised Buenrostro a job with his investment company, Arvco Capital, if Buenrostro ever left CalPERS. The pledge was fulfilled shortly after Buenrostro, who had fallen out of favor with the CalPERS governing board, left the pension fund in mid-2008.

A video of Buenrostro’s wedding, which took place at Villalobos’ Tahoe mansion, showed Buenrostro embracing Villalobos during the reception. But the last time the two men appeared together in court, in San Francisco last July, they stood 10 feet apart and pointedly didn’t look at one another. At the time, Buenrostro’s lawyer was announcing that his client was prepared to plead guilty and testify against Villalobos.

Villalobos, who was free on bond, walked into court that day with the aid of two metal canes, and his breathing appeared difficult. He didn’t appear in court when Buenrostro entered a guilty plea a week later.

His lawyers, in court filings, have said Villalobos had been in poor health since 2011, with maladies that included a heart condition and neurological problems. His trial, originally set for last spring, was delayed because of health issues.

In a court filing earlier this week, Funk said Villalobos had been in and out of emergency rooms in recent months and wouldn’t be ready to go to trial as scheduled Feb. 23.

“Mr. Villalobos is not physically or mentally able to participate in his defense, or to even sit through a trial,” Funk wrote.

Another Villalobos lawyer, Sheila Van Duyne, said from her office in Reno that Villalobos was in “constant, relentless pain over the past year and a half.” She said the government’s prosecution “took its toll” on him.

“It greatly pained him,” she said. “He was being prosecuted for a victimless crime.”

Villalobos leaves three children and several grandchildren, she said.

A former deputy mayor of Los Angeles, Villalobos became a Republican activist who was appointed to the state Personnel Board by then-Gov. Pete Wilson. He parlayed that appointment into a three-year term on the CalPERS board, ending in 1995.

Two years after leaving CalPERS, he turned up at the pension fund’s offices seeking an investment deal for a Texas financial firm. His role became controversial, but the deal was approved. According to court records, he earned most of his commissions during a three-year spree ending in 2008.

Authorities had been hounding Villalobos for several years. The state of California sued him and Buenrostro in 2010, prompting Villalobos to file for bankruptcy protection. The Securities and Exchange Commission sued both men in 2012 over alleged falsification of investment documents. Both cases remain pending.

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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