SACRAMENTO — A former Los Angeles deputy mayor is at the center of an investigation by the California Public Employees' Retirement System into fees paid to agents who help private firms land large contracts to invest the $200-billion pension fund's money.
The fund, known as CalPERS, is looking at $50 million in fees paid in recent years to Arvco Financial Ventures, headed by Alfred Villalobos, 66, who was deputy mayor of Los Angeles for five months in 1993.
Villalobos, who was also a member of the CalPERS board from 1993 to 1995, is a so-called placement agent, or intermediary. His company has helped direct hundreds of millions of dollars in CalPERS money into private investment funds with vast holdings.
In a statement Wednesday, Villalobos denied any wrongdoing and pledged to assist CalPERS, the nation's largest public pension fund, in its investigation.
Placement agents generally are paid a fee of 1% to 2% of the value of deals by the private-equity investment firms. The agents rely on their sometimes long-term relationships with CalPERS and other pension systems to persuade officials to do business with their investment fund clients.
In the last year, placement agents have come under investigation as part of wide-ranging probes into alleged bribery and kickbacks in the awarding of pension fund investment contracts that include California and New York state.
CalPERS said it would share its findings with the Securities and Exchange Commission and the California attorney general's office.
New York Atty. Gen. Andrew Cuomo is conducting a separate criminal investigation of placement agents.
In Los Angeles, two local pension board members resigned in May after getting letters of inquiry from the SEC that asked them whether they had dealings with three placement firms being scrutinized in the New York probe.
The controversy over placement agents comes during a period of heightened pressure on CalPERS. The giant pension fund, which manages retirement benefits for about 1.6 million government workers, retirees and their families, has lost about a fifth of its value since hitting a peak of $247.7 billion in the middle of 2007. Many of the investments touted by Villalobos have lost money in the recession-racked economy.
As part of its inquiry, the CalPERS board said it was conducting a "special review" of more than $50 million in fees paid to the Stateline, Nev., company run by Villalobos.
