FORTUNE -- A federal grand jury this week indicted the California Public Employees' Retirement System's former CEO Fred Buenrostro, on fraud and obstruction of justice charges. Also indicted for fraud was notorious "placement agent" Alfred Villalobos, a Buenrostro pal who was regularly hired by private equity firms seeking fund commitments from CalPERS.
The fraud charges are virtually identical to what was laid out last year in an SEC civil suit, alleging that the two men forged documents related to CalPERS commitments to funds managed by Apollo Global Management (APO). And, like with those SEC charges, this is like nailing Al Capone for tax evasion.
To be sure, Buenrostro and Villalobos were an unholy alliance -- the hen-house gatekeeper and the friendly fox. But these charges don't allege that the pair improperly influenced CalPERS to invest in a fund that it otherwise would not have invested in, or that Buenrostro personally benefited from a successful Villalobos placement.
Instead, they relate Villalobos' attempts to get paid by Apollo for work he actually completed -- but for which CalPERS didn't want to acknowledge. When CalPERS staff refused to sign the verifying documents, Villalobos and Buenrostro took matters into their own hands. Kind of like creating a phony receipt for an expense report, because you lost the real one and no one at the store will create a duplicate (yes, this is far more serious, but you get the picture).
We still have no valid explanation from CalPERS as to why it didn't sign the initial disclosure letter, leading me to believe it was an attempt to establish plausible deniability of Villalobos' dealings in Sacramento. Likewise, Apollo has steadfastly refused to explain why it not only used Villalobos in the first place, but why it paid him more and more money to raise subsequent capital (the opposite of how placement agent compensation usually works).
At this point, I'm beginning to fear that neither Apollo nor CalPERS will ever be asked to answer such questions by someone with subpoena power.
Below is the unsealed indictment:
Steve Rattner gets by with a lot of help from his friends.
FORTUNE -- Well, it's official: Steve Rattner's reputation has been rehabilitated, just two years after settling with federal and state authorities over allegedly participating in a kickback scheme to get public pension fund investments for his private equity firm.
From Andrew Ross Sorkin at The New York Times:
As Mr. Rattner sat across from me in Midtown Manhattan two weeks ago, MOREDan Primack - Feb 19, 2013 3:54 PM ET
Judge slaps wrist of pay-to-play participant.
FORTUNE -- David Loglisci, the corrupt former chief investment officer for the New York State Common Retirement Fund, yesterday was sentenced to a "conditional discharge" rather than jail time.
Apparently Judge Lewis Bart Stone feels that managing an Oklahoma car wash – which apparently is Loglisci's new vacation – is punishment enough for orchestrating a pay-to-play scheme that involved such private equity firms as Quadrangle Group and Riverstone MOREDan Primack - Oct 10, 2012 12:16 PM ET
After more than a year of wrangling, obfuscation and name-calling, Steven Rattner has effectively 'fessed up to having done wrong.
The former car czar and private equity boss today agreed to pay $10 million in restitution to the State of New York, for his role in the state's public pension kickback scandal. He also has agreed to refrain from "appearing in any capacity" before any New York pension fund for the next five years.
This MOREDan Primack - Dec 30, 2010 1:31 PM ET
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