Tag: CalPERS

Alfred Villalobos, Central Figure in the CalPERS Bribery Scandal, Has Died

court room

On Tuesday, the lawyer of Alfred Villalobos said his client was too sick to attend the trial stemming from his alleged bribery of a top CalPERS official.

On Wednesday, the lawyer said that Villalobos, 71, had passed away.

Villalobos, a former placement agent, was on trial for allegedly bribing a former CalPERS Chief Executive to direct money toward certain investment firms.

More from the Sacramento Bee:

Alfred Villalobos, the Nevada businessman at the center of a corruption scandal that gripped CalPERS, has died, one of his lawyers said Wednesday. Cindy Diamond, one of Villalobos’ defense attorneys, said Villalobos died Tuesday. She declined further comment.

Villalobos’ lawyers, as it happens, were prepared to ask a federal judge Wednesday to delay Villalobos’ trial on bribery charges because of their client’s ill health. In a court filing earlier this week, attorney Bruce Funk said “Mr. Villalobos is not physically or mentally able to participate in his defense, or to even sit through a trial.”

The trial was supposed to begin Feb. 23.

The 71-year-old Villalobos has been in poor health for the past three years, according to his lawyers, with his maladies including a heart condition and neurological problems. When he appeared in U.S. District Court in San Francisco last summer on a pre-trial matter, he walked slowly with the aid of two canes and his breathing was difficult.

[…]

In a statement, CalPERS spokesman Brad Pacheco said, “We remain focused on supporting enforcement authorities as they pursue bringing to justice those who broke the law and violated the trust placed in them by the public employees of California.”

Villalobos had pled not guilty and was facing 30 years in prison.

The death will not change the situation of Fred Buenrostro, the former CalPERS executive who is cooperating with prosecutors in exchange for a reduced sentence.

 

Photo by  Lee Haywood via Flickr CC License

CalPERS Funding Ratio Jumps to 77 Percent On Back of Investment Gains

Calpers

CalPERS revealed on Tuesday that its funding situation had improved in 2014; the system is now 77 percent funded, an increase of 7 percentage points from fiscal year 2012-13.

CalPERS attributed the funding increase to investment performance – the fund saw their investments return 18.4 percent last fiscal year.

More from the Sacramento Bee:

CalPERS said Tuesday its financial health improved significantly in the latest fiscal year, thanks to a strong investment gain, although the nation’s largest public pension system remains underfunded.

In its annual financial report, the California Public Employees’ Retirement System said it was 77 percent funded at the end of the fiscal year June 30. That represents a 7 percentage-point increase from a year earlier.

[…]

As for the recent jump in funding levels, “it’s safe to say it’s the investments,” said CalPERS spokesman Brad Pacheco. CalPERS earned 18.4 percent in the latest fiscal year, well above its official forecast of 7.5 percent.

Despite the improvement in finances, public pension critic Dan Pellissier said CalPERS is still struggling to deliver what he called “unsustainable benefits.”

He said CalPERS hasn’t been able to fully right itself even as investment performance strengthens, and a 77 percent funding ratio isn’t sufficient to safeguard benefits for future retirees. Without benefit cuts, taxpayers are going to have spend more, he said.

“That 23 percent that’s still unfunded represents billions of dollars that will be paid by future taxpayers,” said Pellissier, president of California Pension Reform.

As it is, CalPERS has been raising contribution rates from taxpayers in recent years, in part to help overcome the disastrous investment losses suffered during the 2008 market crash. Its most recent rate hike, approved by its governing board last April, is designed to compensate for longer life expectancies for retirees. The rate hike means the state’s annual contribution will gradually grow from $3.8 billion to $5 billion. Local governments and school districts’ rates will go up, too.

CalPERS is the largest public pension system in the United States and manages $295 billion in assets.

 

Photo by  rocor via Flickr CC License

Central Player in CalPERS Bribery Case Is Too Sick For Trial, According to Lawyer

handshake

Alfred Villalobos, the ex-placement agent on trial for bribing CalPERS’ chief executive, is too sick to stand trial, according to his lawyer.

The attorney is pushing for a postponement of the trial, which was set to begin in late February.

Villalobos is 71 years old and has reportedly been in and out of the emergency room in recent months.

From the Sacramento Bee:

In a court filing Monday, attorney Bruce Funk said Villalobos has had “numerous stays in the emergency room” in the past few months. “Mr. Villalobos is not physically or mentally able to participate in his defense, or to even sit through a trial,” Funk wrote.

[…]

In the court filing, Funk said his client was “incoherent” the last time they spoke on the phone, last Wednesday.

Funk wouldn’t go into details, but Villalobos, 71, has clearly been in declining health. His trial, originally set for last March, was postponed after lawyers said he was suffering from various heart ailments and neurological problems.

When he appeared in court last July, the Reno businessman’s breathing was labored and he walked with two metal canes.

Villalobos is accused of paying $250,000 in bribes to Fred Buenrostro, the former CEO of CalPERS, in an effort to steer pension fund investment dollars to Villalobos’ private equity clients. A former California Public Employees’ Retirement System board member, Villalobos earned $50 million in commissions representing clients seeking CalPERS investments.

Fred Buenrostro, former CEO of CalPERS, pled guilty to accepting Villalobos’ bribes.

Villalobos faces up to 30 years in prison.

 

Photo by Truthout.org via Flickr CC License

CalPERS Seeks PE Portfolio Manager

Now hiringCalPERS is looking to hire a private equity portfolio manager (the listing can be accessed here).

The salary range is $11,666.66 – $17,500.00 monthly.

More information from the listing:

Duties include but are not limited to:

* Evaluate performance of legacy partnerships and co-investments

* Lead investment strategies to monetize investments to include secondary sales and monthly calling efforts

* Attend annual meetings, advisory board meetings and conduct quarterly monitoring calls

* Manage and monitor workload for investment professional in his/her reporting structure

Minimum Requirements and Experience:

* Bachelor’s degree in business administration, economics, finance, or a closely related field

* Five years of broad and extensive investment management experience for a major financial institution or firm, or government agency, including some experience leading or coordinating professional staff, and review of large and varied investment portfolio

* 3 years experience restructuring investment commitments ( private equity or equity strongly preferred, other private market experience such as real estate would be relevant in a commingled fund environment.)

* 5 years experience managing people

Desirable Qualifications:

* CFA

* Previous experience working for pension, foundation or endowment fund

* Previous experience leading and mentoring staff

* Ability to work well in a collaborative team environment

* Highly motivated self-starter

CalPERS is the nations largest public pension fund.

 

Photo by Nathan Stephens via Flickr CC License

Ex-CalPERS Hedge Fund Honcho Joins Chatham

building

Chatham Asset Management has hired the former chief of CalPERS’ hedge fund strategy, Ed Robertiello.

Ed Robertiello left CalPERS after the pension fund decided to pull its money out of hedge funds.

More from Bloomberg:

Robertiello started Jan. 1 as a partner and director of strategic development, the $1.7 billion Chatham, New Jersey-based firm told clients in a letter today. Robertiello left Calpers in December, three months after it decided to divest the $4 billion it had invested in hedge funds.

Pension funds face challenges meeting their obligations to retirees as the Federal Reserve holds interest rates near zero, said Evan Ratner, Chatham’s head of research.

“Ed’s been in this position for Calpers, so we believe he will prove invaluable in understanding investor needs,” Ratner said in an interview.

[…]

“Institutional investors are going to continue to allocate to the industry,” Robertiello said in a phone interview. “We want to make sure Chatham’s prepared for it.”

Chatham’s largest hedge fund, the Chatham Asset High Yield Master Fund, invests in speculative-grade bonds and leveraged loans.

Before joining Calpers in 2012, Robertiello was an executive involved in alternative investments at Russell Investments, Credit Suisse Group AG, and the Blackstone Group LP, according to the letter. He began his finance career investing RJR Nabisco Inc.’s retirement and trust assets.

“We appreciate Ed’s contributions to the Calpers investment office and his work on behalf of our members, and wish him the best with Chatham,” Calpers chief investment officer Ted Eliopoulos said in an e-mail.

In September 2014, CalPERS made the decision to exit its $4 billion hedge fund portfolio.

 

Photo by  rocor via Flickr CC License

San Bernardino Sued By Creditor For Favoring Pension System During Bankruptcy

California flag

The bankrupt city of San Bernardino, California has been sued by one of its bondholders for favoring pensioners over creditors during its bankruptcy.

San Bernardino has largely kept up with its payments to CalPERS. But the lawsuit claims the city has not extended equal favor to its bondholders.

From BusinessWeek:

Pension-bond holder Erste Europaische Pfandbrief- und Kommunalkreditbank AG sued San Bernardino yesterday in federal bankruptcy court in Riverside, California, claiming equal status with Calpers. The company, which holds about $50 million in pension obligation bonds, didn’t name Calpers in the suit.

“Any payment of the Calpers pension obligation portion requires equivalent payment of the bondholder pension obligation portion,” the company, a unit of Frankfurt-based Commerzbank AG (CBK), said in the filing.

Cities often issue bonds to raise money to bolster their pension obligations. In San Bernardino’s case, the money was used to fill a hole in its pension fund, which is administered by Calpers. The city also makes regular payments on behalf of its employees to Calpers, which in turn pays retired city workers.

[…]

The lead bankruptcy attorney for the city, Paul Glassman, referred questions to San Bernardino’s elected city attorney, Gary Saenz, who didn’t immediately respond to an e-mailed request for comment on the suit.

San Bernardino filed bankruptcy in 2012. Although it stopped paying CalPERS for a period of a few months, it has since resumed payments so that no pension benefits would be cut as part of its bankruptcy.

Sustainable Investing Experts Weigh In On Fossil Fuel Divestment; Is Engagement A Better Strategy?

fossil fuels

Different pension funds have different opinions on how climate change should affect investment strategy.

Some, like Norway’s largest pension, are willing to divest from certain fossil fuels entirely.

Others, like CalPERS, prefer to use their leverage as major shareholders to engage with companies rather than divest. Many others cite their fiduciary duties to pensioners as a reason they can’t divest from fossil fuels.

What do sustainable investing experts have to say? The Financial Times talked to them:

“The idea that shaming an industry will somehow reduce greenhouse gas emissions is not correct,” says Jonathan Naimon, managing director of Light Green Advisors, a New York asset management firm that specialises in environmental sustainability investing. “It isn’t like divestors are bringing any solutions to the table.”

“It’s actually projects and technologies that reduce emissions and the people developing them are in energy supply companies as well as energy-using companies,” he adds.

[…]

But Bill McKibben, the US environmental activist and writer who co-founded the 350.org climate campaign group spearheading the divestment push, says engagement strategies only suited some companies.

“If we have a problem with Apple paying Chinese workers bad wages you don’t need to throw away your iPhone and boycott Apple stock. You need to put pressure on them so they pay people better and the price of an iPhone goes up a dollar and everyone’s happy,” he says.

But he argues fossil fuel extraction companies are a very different case because their value is so dependent on their reserves of oil, gas and coal. “There’s no way that engagement can persuade them to get out of this business as long as it remains a profitable business,” he says

“The idea that anyone else is going to merrily persuade Chevron or BP that they want to be in the renewables business or something is nuts,” he says. He argues this would only happen with government pressure and that in turn would require the dilution of energy companies’ political power by efforts such as the divestment movement.

[…]

Carbon Tracker itself does not recommend a pure divestment strategy.

“We’re not advocating blanket divestment,” said Anthony Hobley, the group’s chief executive. “We think both engagement and divestment together will achieve more. The sum is greater than the parts because either alone isn’t going to achieve the ultimate objective of a climate-secure energy system.”

What does an oil executive think about fossil fuel divestment? Click here to read his take.

 

Photo by  Paul Falardeau via Flickr CC License

Video: CalPERS Portfolio Manager on Using Influence to Improve Corporate Governance

http://youtu.be/edrGOBG5nXg

This video features a discussion with Anne Simpson, CalPERS Senior Portfolio Manager and Director of Global Governance, about how the pension fund uses its influence as a major shareholder to change corporate governance and push for better social and environmental practices within corporations.

Research Firm: Institutional Investors Still Hungry for Hedge Funds

flying moneyResearch from eVestment indicates institutional investors are still hungry for hedge funds even after a year that saw low returns for the investment vehicles. The research estimates that investors will put at least $90 billion in hedge funds in 2015.

From Money News:

Wealthy investors are poised to put at least $90 billion into hedge funds next year, even after returns have largely been lackluster this year, research firm eVestment said.

Fresh demand from pension funds, endowments, and insurers looking for alternatives to traditional stock and bond holdings will fuel next year’s flows, the researchers wrote in a report.

“Will institutional investors maintain their investments and continue to allocate more to hedge funds in 2015 … The short answer is yes,” they wrote, adding “We expect asset flows into hedge funds of at least between $90 billion and $110 billion in 2015.” Hedge funds manage roughly $3 trillion in assets.

The appetite for hedge funds remains strong even after the $300 billion California Public Employees’ Retirement System, the largest U.S. pension fund, said in September it was pulling out of hedge funds because they are too costly and complicated.

Hedge funds took in roughly $112 billion in new money this year even though returns have been paltry, with the average fund returning roughly 4 percent this year through November. As hedge funds posted low single digit returns, the stock market raced to a series of fresh highs and the Standard & Poor’s 500 index gained 12.8 percent since January. Last year, investors added $62 billion in new money to hedge funds.

The research suggested that investments in stock-oriented hedge funds could slow down, but investments in multi-strategy hedge funds will likely rise in 2015.

 

Photo by 401kcalculator.org

Sentencing Pushed Back For Defendant in CalPERS Bribery Case

Fred Buenrostro

The sentencing of Fred Buenrostro, the former CalPERS executive who pleaded guilty over the summer to accepting bribes, has been pushed back nearly five months to allow further cooperation with the government.

From the Sacramento Bee:

Fred Buenrostro, who left the California Public Employees’ Retirement System in 2008, will now be sentenced May 13 in U.S. District Court in San Francisco. Buenrostro, who is free on bond, was originally scheduled for a Jan. 7 sentencing.

Buenrostro pleaded guilty in July to accepting bribes from former CalPERS board member Alfred Villalobos, a Reno businessman who earned millions in commissions securing pension fund investments for various private-equity firms. Buenrostro said he took more than $250,000 in cash, casino chips and other benefits from Villalobos, who prosecutors say was trying to gain favor for his investment clients.

As part of his guilty plea, Buenrostro agreed to testify against Villalobos, who has pleaded not guilty. Prosecutors and Villalobos’ lawyer filed a joint statement in court last week asking for the postponement “in order to permit Mr. Buenrostro’s ongoing cooperation with the government.”

Judge Charles Breyer agreed to reschedule the sentencing. Buenrostro is expected to get a five-year prison term, according to the plea agreement, although the judge will have the final say.

Villalobos, who is also free on bond, is scheduled to go to trial in February on three felony charges. If convicted, the 70-year-old Villalobos could be sentenced to up to 30 years in prison. Villalobos is a former deputy mayor of Los Angeles who served on the CalPERS board in the early 1990s.

More Pension360 coverage of the bribery scandal can be read here.


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