The federal fraud indictments of two former CalPERS officials, announced today in San Francisco, represent the dropping of shoes from a very tall height -- at least that's one explanation of why the case has taken so long.
The charges against former CalPERS Chief Executive Fred Buenrostro and former CalPERS board member Alfred Villalobos stem from wrongdoing that may date back as far as 2002. A report CalPERS commissioned from the law firm of Steptoe & Johnson was made public in 2011.
Back then I raised the question whether the report was enough for CalPERS to be scrubbed clean, and answered in the negative. California employees and taxpayers should still be unsatisfied. Leaving aside state officials who serve on the CalPERS board ex officio, three board members who served while Buenrostro and Villalobos were doing their magic are still in place: President Rob Feckner, Vice President George Diehr, and member Priya Mathur.
They should all have stepped down when the scale of alleged wrongdoing by Buenrostro and Villalobos was spelled out by the Steptoe firm; now that it's clear that the alleged wrongdoing rose to the level of indictable offenses, there's even less justification for their remaining in place. Feckner in 2011 claimed that "ninety percent" of what was in the Steptoe report was "news to everyone." But it wasn't -- Buenrostro's favoritism toward certain fund managers was openly discussed by the CalPERS staff. The board simply chose not to listen. When a dereliction of oversight happens on your watch on this scale, you haven't done your job.