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Ex-Teachers Pension Chief Pleads Guilty in Loan Case

September 25, 1987|DOUGLAS SHUIT | Times Staff Writer

SACRAMENTO — Former state teachers pension fund chairman Gilbert Chilton pleaded guilty to charges of conspiracy, extortion, misuse of funds and tax evasion during a teary and emotional court appearance Thursday, admitting for the first time publicly that he accepted a payoff for arranging a $50-million loan of state funds for a shaky oil drilling venture.

Chilton, 43, a fugitive for nearly four years, broke down after entering his guilty plea, sobbing an apology "for what I've done."

U.S. District Judge Raul Ramirez said Chilton faces up to 35 years in prison and a possible $125,000 fine. Chilton also is accountable for $457,000 in back federal taxes and repayment of more than $440,000 embezzled from a Fresno savings and loan association, the judge said.

The one-time chairman of the State Teachers Retirement System, who allegedly split a $1.5-million payoff with an accomplice in return for making the $50-million pension fund loan, will be sentenced Nov. 18.

During a 35-minute hearing in Ramirez's court, Chilton occasionally turned around and cast loving smiles at his girlfriend, Cheryl Ciccarelli, who authorities said accompanied Chilton when he disappeared in 1982 just as the pension fund scheme was being uncovered.

But as Ramirez read the charges against him and outlined the consequences of his guilty pleas, Chilton found it difficult to utter even brief responses. Later, he told Ramirez that it was "difficult to face the reality" of what he had done.

Marriage Plans

Clad in designer jeans, a short-sleeve sport shirt and black boots, Chilton told the court, "I would like to publicly apologize to those to whom I have caused injury or harm. . . . I'm sorry."

Ciccarelli, 28, who has not been charged but has been named as a material witness and must report her movements to the court, told reporters after the hearing that she and Chilton plan to marry, even if he receives the full sentence.

"I'll stand by him. I love him," she said.

U.S. Atty. David F. Levi, who negotiated the guilty plea, said he was satisfied, even though it meant that dozens of individual counts against Chilton were dropped. Chilton entered pleas of guilty to one count of each charge against him. Included in the plea is a recommendation by Levi that Chilton be given five years of probation for the tax evasion charge.

Levi said that even with other counts being dropped, Chilton faces a maximum penalty of 35 years in prison. "Practically speaking, you are not going to get any more time on any one individual anyway," he said.

The federal prosecutor said that so far no funds have been recovered from Chilton. The former state official, when he turned himself in, said he was destitute. He was given a court-appointed attorney.

Chilton's attorney, Steven Bauer, said he believed that Chilton had spent all his money. "Whatever he got, he spent," Bauer said.

The tax evasion charge stems from the $1 million in income that Chilton agreed he received in 1982, much of it in embezzled funds from Guarantee Savings and Loan of Fresno and his share of the kickback from the pension fund scheme. As part of the plea agreement, Chilton admitted owing $457,000 in federal taxes.

In pleading guilty to the extortion count, Chilton admitted that in 1982 he received "a substantial payoff" from Colorado businessman Charles Raymond, who has since died, in return for steering a $50-million loan to Raymond's oil company, Txpacco Inc. An accomplice, Anthony J. Truex, received a share of the $1.5-million payoff, which came from the pension fund loan. Truex is serving a three-year federal prison sentence for his role in the scheme.

Oversaw Investments

State officials say that although they have not recovered any money from Chilton, they have recovered most of the money loaned to the Denver oil company.

Chilton engineered the loan while serving as one of three members of a retirement system investment committee responsible for approving all of the pension fund's investments. He and another member of the committee, former state Controller Ken Cory, voted to approve the loan. Cory, who claimed he was duped by Chilton, has not been implicated in the criminal investigation.

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