Former Villalobos employee resurfaces

A former employee of embattled placement agent Alfred Villalobos has found a new home at a small firm that makes investments in under-penetrated markets in the US Southwest and California.

Dusty Wunderlich, who once held the title of vice-president of investment banking at Nevada-based placement agency ARVCO, earlier this year joined California-based DCA Capital Partners as a principal. Wunderlich’s role at DCA is to help expand the firm’s focus into Nevada, Utah, Arizona, Oregon and the central valley of California, Wunderlich told sister title Private Equity International in an interview this week.

The firm is raising its second fund, targeting $75 million, and has applied for Small Business Investment Company (SBIC) status with the US government, Wunderlich said. The fund is seeking commitments from high net worth individuals, public institutions like pension funds, foundations and endowments and banks, he said. SBIC status would give banks flexibility to commit to DCA’s fund despite the restrictions on bank private equity exposure in the Dodd-Frank financial regulations.

Villalobos is under indictment by California’s attorney general for alleged fraud in connection with fundraising for private equity funds through his company, ARVCO. He has been charged along with former chief executive officer of the California Public Employees’ Retirement System, Fred Buenrostro, with allegedly defrauding Apollo Global Management by filing fake approval documents for fundraising contracts. He also declared bankruptcy in 2010.

Wunderlich worked for Villalobos’ firm, ARVCO Financial Ventures, right out of school, and said he was never aware of anything suspicious being perpetrated by his former boss. Wunderlich was not charged or implicated in the ARVCO investigation, he said.

“In my time with ARVCO, I never felt there was any wrong-doing going on or that [Villalobos] put me in a position [where] I felt I was compromising my integrity,” Wunderlich said.

As DCA meets potential limited partners in the market, Wunderlich has been open with them about his past, he said. The firm was aware of Wunderlich’s affiliation with ARVCO but understood he was a relatively junior employee in the organisation, according to Curtis Rocca, managing partner at DCA Partners.

“There is nobody we’ve found, nobody, who is as committed and passionate in attracting investment capital to the state of Nevada as Dusty,” Rocca said in an interview Wednesday.

DCA has expressed interest in taking part in Nevada’s Permanent School Fund’s first-ever private equity programme. The fund, with about $313 million in assets, has carved out $50 million to invest in GPs that focus predominantly on Nevada-based businesses. The fund recently hired Hamilton Lane to run the programme.

DCA was founded in 2001 and along with private equity also provides restructuring, turnaround and strategic advisory advice.