CalPERS Probe Continues: Former CEO Turns State’s Evidence

Reuters / Max Whittaker
Reuters / Max Whittaker
Newport Beach, CA

After former CalPERS chief executive officer Fred Buenrostro, was sentenced to 4.5 years in prison for taking $250,000 in bribes from a private equity broker who committed suicide, the U.S. Attorney Office told a federal court the probe is continuing.

Breitbart News noted on June 3 that after Buenrostro was given a shorter-than-expected prison term, there was tremendous anger.

California Pension Reformer Chuck Reed complained that the corruption associated with the passage of SB 400, the pension spike in 1999, and the subsequent bribery scandal is much bigger than the Bernie Madoff and Enron scandals combined: “What CalPERS did is the worst financial fraud in the history of the state and probably the country.”

But Assistant U.S. Attorney Timothy Lucey just told a San Francisco federal court that Buenrostro, following his guilty plea, went on “to assist the government in a number of ongoing investigations the court is aware of through the filings that have been made to the court, both the public filings and the sealed filings.”

Buenrostro’s attorney, William Portanova told the court that his client “took the investigation to a level far beyond that which his own case involved.” He added that information in the sentencing memorandum and sealed documents “touches on some of these larger investigations.”

U.S. District Judge Charles Breyer noted that because of the quality of cooperation by Buenrostro before his guilty plea, the charges he faced were refilled to reduce the maximum sentence from 10 years to five. He added that continuing cooperation after the guilty merited another six months’ reduction.

Judge Breyer said Buenrostro committed “a spectacular breach of trust for the most venal of purposes, which is self enrichment.” He called Buenrostro’s “double down” on corruption as “a dagger in the heart of public trust, and without public trust our government institutions cannot function.”

Once the most powerful pension manager on the planet, Buenrostro, 66, was shackled in chains for sentencing. He wore a faded blue pajama-style prison garb, with day-glo orange footwear.

The convicted felon said in his sentencing statement, “Your honor, I take full responsibility and accept the consequences of the actions I took.” In an effort to show remorse and beg for mercy he said in a clear voice, “I’m humiliated, embarrassed, and deeply ashamed of my actions.”

Buenrostro apologized to CalPERS, the court, prosecutors, and his fellow Californians. He emphasized that he assisted the U.S. Attorney, the Securities and Exchange Commission, and the state Attorney General, “in their investigation and litigation and will continue to render assistance.”

Most Wall Street analysts had been especially incensed by claims that the $50 million in crony commissions extracted by private equity broker Alfred Villalobos from CalPERS by bribing Buenrostro was only alleged by the Obama administration Department of Justice to have cost CalPERS $11 million.

Critics virulently protested that despite Buenrostro being subject to “felony forfeiture,” Buenrostro settled a lawsuit from the State of California by agreeing to pay a $250,000 fine and only having his annual pension cut from $201,600 to $141,278 a year.

Villalobos shot himself in the head in January after he was indicted. But Express Scripts, former Democrat state Sen. Richard Polanco, Apollo Global Management, and a number of investment firms may now also be in the Justice Department’s crosshairs.