Former “placement agent” Al Villalobos yesterday sued Apollo Global Management (APO) in a Nevada bankruptcy court, alleging that the firm had improperly withheld payments related to his capital-raising work on behalf of the firm. The complaint also includes the transcript of a recent deposition of Apollo founder Leon Black, which (finally) shines a bit more light on Apollo’s thinking during the years in which it used Villalobos.

For the uninitiated, Villalobos has been accused of fraud by both The Securities & Exchange Commission and The U.S. Department of Justice, who allege that he and former CalPERS CEO Fred Buenrostro forged disclosure documents. Basically: Villalobos needed such documents signed by CalPERS in order to get paid by Apollo, CalPERS counsel refused to let them be signed and VIllalobos/Buenrostro allegedly took matters into their own hands. Apollo accepted the “forged” documents and paid Villalobos, but did not provide latter payments after the alleged plot was exposed. Villalobos has since filed for personal bankruptcy, thus prompted yesterday’s lawsuit.

Some notes on the new case.

1. Apollo has no complaints about the actual job Villalobos did for the firm. In fact, Black says that he thinks Villalobos “did a good job.” Not too surprising, I guess, given that Apollo secured billions of dollars in commitments and other arrangements with CalPERS.

2. When asked why Apollo hired Villalobos in the first place, Black said (in part): I think he really knew the – what’s the word I’m looking for? – the roadmap of how calPERS worked in terms of the committee process there… He knew people on the board. He knew people – their gatekeepers. So he had access to the process of getting one, the attention from, you know, the decision makers there, which is very key to what is a – no other way to describe it – a Kafkaesque process… And you still have to prove yourself and you still have to go through a gauntlet of due diligence and questions.

3. Many of Apollo’s early agreements with Villalobos were verbal, with written agreements only beginning once Suydam joined Apollo in 2006. Villalobos claims in his complaint that he had verbal assurance that Apollo would pay him for any future fund commitments from LP relationships he originally secured (CalPERS and others), a claim that I’d expect Apollo will deny.

4. Leon Black takes issue with a CalPERS-commissioned report that criticized former pension investment staffer Leon Shahinian for accepting airfare and a dinner from Apollo during a due diligence trip. Black says Apollo was in a time crunch for a new commitment – due to pending legislation that would have changed tax policy/IPO prep – and that there were no commercial flights available at that very moment to get Shahinian to New York and then to a previously-scheduled stop in Florida. He adds that the dinner was a charity event to which Black already had bought “tables,” and there were seats that otherwise would have gone unfilled.

5. Apollo, in a statement, said: The lawsuit filed today by Arvco has no basis, and Apollo will vigorously defend the claims. Both the United States Department of Justice and the Securities and Exchange Commission have charged Alfred Villalobos, and his firm, Arvco, with fraud. Apollo has fully cooperated with all investigations, and both the SEC and DOJ have identified Apollo as one of the principal victims of Arvco’s fraud.  After lengthy investigations, both the Justice Department and SEC have concluded that by fabricating documents, Arvco defrauded Apollo out of between $14 and 18 million dollars.  No regulator has asserted that Apollo did anything improper in connection with its employment of Arvco. If the government’s charges are true, then Arvco breached its contracts with Apollo by failing to abide by the law at all times. The assertion in this lawsuit, by Arvco’s creditors, that Apollo should pay Arvco millions of dollars — when Arvco has been charged with defrauding Apollo of even more — is totally illogical and without support in the facts or the law.”

6. Worth noting that Apollo never actually claims to have been victimized – instead putting that on DOJ and SEC claims. After all, the firm paid for services it admits were rendered. The fraud was based on CalPERS’ refusal to sign documents and then Villalobos allegedly forging them – not on the original documents’ illegitimacy.

Below are both yesterday’s complaint and Black’s deposition:

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