California State Attorney General Edmund Brown Jr. has filed a civil suit against former California Public Employees Retirement System board member Alfred Villalobos, his company ARVCO Capital, and former CalPERS CEO Federico Buenrostro, charging them with fraud.
Among the charges are allegations that Villalobos “attempted to bribe” the head of CalPERS alternative investment programme, Leon Shahinian. Shahinian has been placed on administrative leave, according to a source close to the pension, who declined to say how long that had been the case.
Attorney General Brown, the former governor of California, will be holding a press conference at 4 pm EST.
“Working as a placement agent for ARVCO, Villalobos spent tens of thousands of dollars to lavishly entertain key senior executives at CalPERS, who then influenced the board to authorise investments that generated over $40 million in commissions to Villalobos,” said Brown, in a statement. “None of these actions were disclosed as required by law, as state pension holders and taxpayers have every right to expect.”
Brown also obtained a court order to freeze Villalobos' assets and place them in receivership to recover the more than $40 million in commissions that Villalobos earned during the period alleged in the complaint.
Not named in the suit is Apollo Global Management, a former major client of Villalobos, who placed billions of dollars of CalPERS commitments with Apollo vehicles. Shahinian is also not named in the suit.
According to an Apollo statement: “We will continue to cooperate fully with all regulatory agencies investigating this matter.” We believe we at all times have handled our placement agent relationships in an appropriate manner. We are deeply troubled by the alleged activities described in the California Attorney General's complaint.”
The complaint details an allegedly lavish trip that Villalobos took with Shahinian to New York to attend a benefit honouring Apollo head Leon Black. Following that trip Shahinian allegedly “recommended” a $700 million investment in Apollo Global Management without dislosing the “all-expenses paid trip” to New York.
Among the charges against Villalobos are that he “falsely represented that they had the required securities licenses and complied with all laws,” that he “gave accepted and failed to disclose gifts” and that he “submitted bogus disclosure forms”.