(Bloomberg News) The former chief executive of the California Public Employees' Retirement System was sued by U.S. regulators over claims he defrauded an investment firm into paying $20 million in fees to a friend's placement agencies.
Federico Buenrostro, who served as Calpers CEO from 2002 to 2008, and his friend Alfred Villalobos, the former deputy mayor of Los Angeles, fabricated documents given to New York-based private-equity firm Apollo Global Management, the Securities and Exchange Commission said today in a lawsuit filed in U.S. District Court in Nevada. California regulators sued the two men in May 2010 over similar claims.
The documents gave the false impression that Calpers had reviewed and signed placement-agent fee-disclosure letters in accordance with its established procedures, the SEC said. The lawsuit also names Villalobos and his firm ARVCO Capital Research LLC as defendants.
"Buenrostro and Villalobos not only tricked Apollo into paying more than $20 million in placement agent fees it would not otherwise have paid, but also undermined procedures designed to ensure that investors like Calpers have full disclosure of such fees," John McCoy, associate regional director of the SEC's Los Angeles office, said in a statement.
A phone call to Bill Kimball, an attorney for Buenrostro, wasn't immediately returned.
The SEC is seeking an order requiring Buenrostro and Villalobos to disgorge any ill-gotten gains and pay fines.