A former chief executive officer of California’s $291 billion pension fund for public employees was sentenced in federal court in San Francisco Tuesday to four years and six months in prison for conspiring to accept bribes to influence the fund’s investments.
Federico Buenrostro, 66, of Sacramento, headed the California Public Employees Retirement System, known as CalPERS, from 2002 to 2008.
He pleaded guilty to the bribery conspiracy charge before U.S. District Judge Charles Breyer in 2014 and was sentenced by Breyer Tuesday.
Breyer said as he pronounced the sentence:
“This case is seriously troubling. It was a spectacular breach of public trust for the most venal of purposes, which was self-enrichment…. It was essentially a dagger in the heart of public trust.”
CalPERS is the nation’s largest public pension fund. It administers pensions and health benefits for 1.8 million retirees and current employees of the state, local governments and school districts and their families.
Buenrostro admitted during his guilty plea to accepting $100,000 in paper bags and $100,000 in a shoebox from investment placement agent Alfred Villalobos in 2007, plus another $50,000 bribe from Villalobos in 2010 after Buenrostro had left CalPERS and federal and state investigations had begun.
He was originally indicted in 2013 on five criminal charges, but prosecutors reduced the charges to the single bribery-conspiracy count after he agreed to plead guilty, cooperate with the investigation and testify against Villalobos.
Villalobos, who prosecutors said made millions of dollars in commissions resulting from the plot, was also indicted, but he committed suicide at an indoor shooting range in Nevada in January 2015, one month before he was due to go on trial in Breyer’s court.
Villalobos’s now-defunct company, Arvco Capital Research LLC of Nevada, agreed in March to pay the state $20 million in the settlement of a civil lawsuit filed by Attorney General Kamala Harris in Los Angeles County Superior Court.
In that same lawsuit, Buenrostro agreed to pay the state $250,000.
Breyer today fined Buenrostro $250,000, but said he could receive credit for amounts paid to the state or to the U.S. Securities and Exchange Commission in a pending civil lawsuit in federal court in Nevada.
Buenrostro told the judge:
“I take full responsibility. I’m humiliated, embarrassed and deeply ashamed of my actions. … I want to apologize for my actions and act solely in the best interests of California.”
The four-and-one-half year sentence was six months longer than the four-year term recommended by prosecutors.
The conspiracy charge normally carries a mandatory five-year sentence, but prosecutors asked for a downward departure on grounds of Buenrostro’s cooperation with the ongoing investigation.
Breyer said Buenrostro’s cooperation helped federal prosecutors carry out their duties, but said the former CEO’s crime “was so far beyond acceptable conduct it warrants a severe punishment.” Prosecutors said in a sentencing brief that Buenrostro spent most of the bribe money he received in 2007 on paying his divorce lawyer.
Buenrostro, who appeared in court in prison garb and ankle shackles, has been in custody since April, when his probation for a misdemeanor domestic violence incident with a former girlfriend was revoked because he violated a no-contact order.
His lawyer, William Portanova, said outside of court that Buenrostro engaged in “a long series of criminal acts for a long period of time.” “Mr. Buenrostro is trying to atone for it,” he said.
Portanova said he could not comment on the ongoing investigation.