PHOENIX - Former California Public Employees' Retirement System chief Federico "Fred" Buenrostro received a prison sentence of four and a half years Tuesday, nearly two years after pleading guilty to accepting bribes in exchange for influencing CalPERS staff.
Buenrostro, who received his sentence in federal court in San Francisco, served as chief executive officer of CalPERS from 2002 to 2008. During that time, he admitted, he accepted $200,000 from investment manager Alfred Villalobos in exchange for using his position to help Villalobos net what prosecutors said amounted to millions of dollars of ill-gotten gains as part of a long conspiracy between the two men.
"Buenrostro violated the trust of the people of the State of California when he entered into a decade-long conspiracy of corruption, deception, and deceit," prosecutors said in their sentencing memorandum earlier this month. "As CEO, the highest ranking officer with powers and duties directly delegated from the CalPERS Board of Administration, Buenrostro was responsible for the administration of CalPERS' financial affairs and was entrusted with confidential information relating to CalPERS' ongoing and prospective investment of billions of dollars in assets. He owed a duty of loyalty to the State of California, and its citizens, free from deceit, self-enrichment, concealment, and conflict between his own personal interests and the interests of the State of California. He utterly failed to carry out that duty."
Current CalPERS leaders said the pension system has improved.
"This saga has now come to an end," said CalPERS board president Rob Feckner. "We are stewards of a sacred trust, and it must never be compromised for personal gain. As an organization, we've taken meaningful steps to strengthen accountability and transparency throughout CalPERS. We'll continue to work to make sure these measures are rigorously followed and that we hold ourselves to the highest ethical standards."
CalPERS, in a news release, said that since 2009 it has put in place policies to prevent such abuses such as requiring contractors to disclose whether they're using agents to seek the pension fund's business and to disclose how much they paid the agents
"This chapter in our history is now behind us, and CalPERS has emerged a stronger, more dynamic organization," said Anne Stausboll, CalPERS CEO since January 2009. "Over the past seven years, we have built a lasting, principled foundation for future success. More than ever, we're focused on our service to our members and employers and to ensuring that the CalPERS Fund is secure for generations to come."
CalPERS is the nation's largest public pension fund, serving some $1.8 million members and managing an investment portfolio of about $293 billion.