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US ex-pension fund boss faces fraud charge

Reported by AAP
Tuesday, April 24, 2012
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US securities regulators have charged the former head of the huge CalPERS pension fund with fraud over an alleged scheme to help a friend pick up $US20 million ($A19.34 million) in bogus agent fees.

The Securities and Exchange Commission (SEC) on Monday alleged Federico Buenrostro, who ran the California Public Employees' Retirement System, plotted to help former board member Alfred Villalobos collect undeserved commissions on CalPERS investments.

The SEC said that in 2008, Villalobos used forged CalPERS letters to claim fees as an authorised investment placement agent with Apollo Global Management, an investment manager specialising in "alternative" strategies and distressed assets.

Buenrostro is alleged to have helped fabricate the documents that authorised Apollo to pay the fees, the SEC said.

"Buenrostro and Villalobos (allegedly) not only tricked Apollo into paying more than $US20 million in placement agent fees it would not otherwise have paid, but also undermined procedures designed to ensure that investors like CalPERS have full disclosure of such fees," said SEC California associate regional director John McCoy.

Buenrostro was CalPERS head from 2002 to 2008, giving him huge power over the country's largest single pension fund, serving 1.6 million California civil servants and retirees.

The fund currently has about $US235 billion ($A227.24 billion) under management, making it one of the most sought-out investors for investment managers like Apollo.

The SEC alleged that Villalobos had picked up a total of $US58 million ($A56.08 million) in investment fees involving CalPERS investments from 1997 to 2008.

After leaving CalPERS in June 2008, Buenrostro went to work for Villalobos' company ARVCO.

The two were sued by California in 2010, accused of using the scheme to gain $US40 million ($A38.68 million) in illicit commissions.

24/11/2014 02:53Sydney, Australia. 24 November,2014
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