SAN FRANCISCO -- The former head of the California Public Employees’ Retirement System, the nation’s largest public pension fund, pleaded guilty Friday to bribery and fraud.

Federico Buenrostro Jr., the former chief executive of CalPERS, entered his plea in San Francisco federal court, and acknowledged receiving paper bags and a shoe box stuffed with $200,000 in cash along with casino chips and other benefits from Alfred Villalobos, a Lake Tahoe, California, investment manager who also served on the CalPERS board in the mid-’90s.

Buenrostro, CEO of CalPERS from 2002 through 2008, said he went to work for Villalobos the day after his state pension took effect and that he accepted an additional $50,000 after lying to federal investigators in 2010 about the pair’s relationship.

Buenrostro, 64, said he used his influence to make investment decisions beneficial to Villalobos’ clients. Buenrostro also said he gave Villalobos access to the pension system’s confidential investment information.

Further, Buenrostro said he forged letters that allowed Villalobos’ firms to earn millions in commissions for investing $3 billion in the pension fund’s money. Buenrostro said he began forging the so-called investor disclosure letters after CalPERS legal and investment offices declined to authorize them.

Villalobos wouldn’t have received commissions from the Wall Street equity fund Apollo Global Management without those letters.

Villalobos has pleaded not guilty to fraud charges and other related counts.


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His attorney, Bruce Funk, said his client denies the allegations contained in Buenrostro’s plea agreement. "If he’s truthful, there is nothing he can say that will hurt Mr. Villalobos," Funk said.

Buenrostro faces five years in prison and a $250,000 fine when he is sentenced in January. In exchange for a lesser sentence, Buenrostro has agreed to cooperate with the continuing investigation of Villalobos, said Buenrostro lawyer William Portonova.

"He got tired of lying," Portonova said. "He’s ready to tell the truth."

Aside from the cash and chips, Villalobos paid for Buenrostro’s wedding and hosted it at his home in 2004, Buenrostro said. Buenrostro also said that Villalobos paid for first-class airfare, hotels, meals and entertainment for a business trips to Dubai, Hong Kong and Macau.

The guilty plea is the product of an investigation into the role of placement agents such as Villalobos, middlemen hired by money-management firms to help them win business with investors.