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Former CalPERS head to plead guilty in pay-to-play fraud case

Federico R. Buenrostro Jr., the former CEO of the California Public Employees’ Retirement System, is expected to plead guilty for his involvement in a “pay-to-play” scheme that made the pension fund trick Apollo, a global management company, into paying millions in fake fees.

Buenrostro’s attorney, along with a federal prosecutor, said on Monday that a plea agreement could be made by next week, according to the Wall Street Journal. It was also reported that Buenrostro provided prosecutors with information about Alfred J. Villalbos, a middleman in the scam, according to the attorney.

Two years ago, federal regulators charged Buenrostro and Villalobos with creating fake documents in 2008 to dupe Apollo into paying the millions of dollars to Villalobos’ firm. CalPERS’ investment team, however, refused to sign the letter, prompting the duo to make fake disclosure letters to make it seem as if they actually came from the pension fund, according to the WSJ.

The plea could mean a maximum of five years in prison for Buenrostro, who served as the head of CalPERS from 2002 to 2008. Meanwhile, CalPERS, the nation’s largest public pension fund,  said it “looks forward to the closure of these cases at the appropriate time in the due course of the justice system,” according to a spokesman for the fund.