2 indicted on conspiracy, obstruction charges in CalPERS pension fund scandal

What made it a criminal case, prosecutors say, was a handful of phony letters.

Fred Buenrostro, the former chief executive of CalPERS, and his longtime friend Alfred Villalobos were indicted Monday by a federal grand jury on charges that included conspiracy and obstruction of justice.

The indictments represented the first criminal charges in a case that rocked the nation’s largest public pension fund starting in October 2009. Court papers show the criminal investigation began in spring 2010.

“It’s certainly been a long time coming,” said CalPERS board President Rob Feckner, who oversaw a series of reforms instituted in the wake of the scandal. “A lot of people were wondering if this was really going to happen.”

Villalobos, a former pension fund board member, earned $50 million in commissions as a “placement agent” — a kind of marketing rep who secured billions of dollars worth of CalPERS investments for his Wall Street clients.

As detailed in a 2010 state lawsuit, the Lake Tahoe businessman hosted Buenrostro’s wedding and took the CEO on an around-the-world trip. The suit says Villalobos also promised Buenrostro a job with his firm and a free Tahoe condominium should he leave CalPERS — pledges that were fulfilled soon after the CEO quit the pension fund in 2008.

The indictment, unsealed in U.S. District Court in San Francisco, mentions none of those allegations.