Villalobos ‘refusing’ to talk in CalPERS probe

One-time California Public Employees' Retirement System board member-turned placement agent Alfred Villalobos denied fraud allegations Monday, through a statement from his law firm.

Last week, California State Attorney General Edmund Brown Jr. filed a civil suit against Villalobos alleging that he “attempted to bribe” the head of CalPERS alternative investment programme, Leon Shahinian, among other charges. Shahinian has been placed on administrative leave, but has not been named in the lawsuit.

Villalobos

In a statement issued by his law firm, Patterson Belknap Webb & Tyler, Villalobos denied the accusations. “We vigorously deny the allegations made in the California attorney general's complaint,” the statement read.

Former CalPERS CEO Federico Buenrostro, also named in the lawsuit, has not commented on the allegations.

The law firm added that it has been cooperating with the attorney general's office. “We are very disappointed that the attorney general proceeded in this fashion, without permitting us to respond beforehand to these serious allegations and to clarify significant factual errors on his part,” the statement said.

Brown's office said last week that it subpoenaed Villalobos and his placement agency, Arvco Capital Research, for documents and testimony during the investigation. Arvco has produced documents, but Villalobos has not, according to the attorney general.

“Villalobos appeared but claimed his Fifth Amendment privilege, refusing to answer any substantive questions, and did not produce records requested from him,” said Brown's spokeswoman Christina Gasparac, in a written statement.

The complaint details an allegedly lavish trip that Villalobos took with Shahinian to New York to attend a benefit honouring Apollo Global Management’s head Leon Black. Following that trip Shahinian allegedly “recommended” a $700 million investment in Apollo without disclosing the “all-expenses paid trip” to New York.

“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.”