Defendant in California pension fraud case dies after prolonged illness as trial neared

Markets Associated Press

A defendant in a bribery scandal at the California Public Employees' Retirement System — the nation's largest public pension fund — died just weeks before his trial was set to start.

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Alfred Villalobos' attorney, Bruce Funk, said his client died Tuesday in Reno, Nevada, after a prolonged illness. He was 71.

Funk said he was not at liberty to discuss Villalobos' medical condition. But in a court filing on Monday, he said Villalobos had gone to an emergency room numerous times over the previous five months and was incoherent and had difficulty communicating during a recent phone conversation.

Villalobos was accused of giving bribes to Fred Buenrostro Jr., a former chief executive of CalPERS, in exchange for Buenrostro's help in getting CalPERS to make investment decisions that benefited Villalobos' clients.

CalPERS has more than $300 billion in assets.

Buenrostro pleaded guilty last year to fraud and bribery charges.

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Villalobos denied the allegations and pleaded not guilty to fraud charges and related counts. He was scheduled to go on trial Feb. 23.

"He was looking forward to exonerating himself at trial," Funk said. "But for this prolonged illness, he would still be alive today and ready to go trial. It's just unfortunate."

In his plea agreement, Buenrostro said Villalobos, a former CalPERS board member, took him on a trip around the world, gave him casino chips and paid for his wedding in Lake Tahoe, California.

In exchange, Buenrostro said, he forged letters allowing firms connected with Villalobos to collect a $14 million commission on $3 billion of pension fund investments.

Further, Buenrostro said that after he left CalPERS and went to work for Villalobos, he accepted $50,000 to lie to federal investigators in 2010 about their relationship.

Buenrostro is scheduled to be sentenced in May and could face five years in prison and a $250,000 fine.