One of the main suspects is Alfred J. Villalobos, a former deputy Los Angeles mayor and CalPERS board member. A man ostensibly dedicated to such noble causes as serving the urban poor and managing the retirement benefits of state employees has been accused of being one of the most crooked delinquents in the country. He allegedly made a fortune in kickbacks while putting billions in pension benefits at risk.
From Instapundit comes word that a federal grand jury has indicted Villalobos and former CalPERS CEO Federico R. Buenrosto on charges of fraud, conspiracy, and obstruction, mainly for defrauding a private equity firm in which they invested at least $3 billion of California employees’ pension contributions. For his help in arranging the CalPERS investment and others, Villalobos received nearly $50 million in fees. When the firm asked him to comply with securities laws, Villalabos allegedly conspired with Buenrostro to make it look like CalPERS had approved the payments. Villalabos is said to have bought the CEO’s collaboration with private jets and gambling jaunts, turning Buenrostro into “a puppet,” according to an internal investigation report.
This is the kind of story that has progressive heads spinning. As in the case of Detroit, collusion between Wall Street firms and those meant to serve public employees breaches the lazy conviction that somehow Wall Street is by nature the Sheriff of Nottingham to the Robin Hood of public servants. This Manichean fantasy of greedy corporate bankers preying on earnest representatives of “the people” is not just silly and lame. It does a disservice to public employees, who need to know that their pension managers, far from having their interests in mind, are playing self-interested and often illegal games of roulette with the funds these employees have paid into for years.
America’s pension crisis and the corruption that colors it are among the most pressing issues this country faces. Blue model defenders pretending it isn’t happening are not helping pensioners or the poor, but turning a blind eye to the system that exploits them.
[Image of California piggy bank courtesy of Shutterstock.com]
[Edited for clarity. Thank you to alert reader SM.]