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Ex-chief of huge pension fund guilty of bribery

By WTOP Staff

PAUL ELIAS
Associated Press

SAN FRANCISCO (AP) — The former head of the nation’s largest pension fund admitted Friday that he took bribes, including hundreds of thousands of dollars stuffed in paper bags and a shoe box, and helped an associate collect millions in a fraudulent investment scheme.

Fred Buenrostro Jr. pleaded guilty in San Francisco federal court to fraud and bribery charges stemming from his time as chief executive of the California Public Employees’ Retirement System from 2002 to 2008.

In his plea agreement, Buenrostro said that in exchange for his help Alfred 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.

Villalobos denied the allegations through his attorney Friday.

Buenrostro’s guilty plea arises from a yearslong investigation into the role of money-management firm middlemen, called placement agents, in helping clients win investment business from a California pension system that controls $300 billion.

CalPERS said the investigation has prompted it to take “aggressive steps to implement policies and reforms that strengthen accountability and ensure full transparency.”

Buenrostro said in his plea that he started taking bribes in 2005 to use his influence with CalPERS to make investment decisions to help Villalobos’ clients. He also said he gave Villalobos, a CalPERS board member in the mid-90s, access to confidential investment information.

The 64-year-old former executive said he forged letters allowing firms connected with Villalobos to collect a $14 million commissions on $3 billion pension fund investments. He said he started writing bogus investor disclosure letters after CalPERS legal and investment officials declined to authorize them.

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

Buenrostro faces five years in prison and a $250,000 fine when he is sentenced in January. In exchange for a lesser sentence, Buenrostro has agreed to cooperate with the continuing investigation of Villalobos, said Buenrostro lawyer William Portonova. “He got tired of lying,” Portonova said. “He’s ready to tell the truth.”

Villalobos has pleaded not guilty to fraud charges and other related counts. His attorney, Bruce Funk, said his client denies the claims contained in Buenrostro’s plea agreement. “If he’s truthful, there is nothing he can say that will hurt Mr. Villalobos,” Funk said.

Buenrostro and Villalobos, 70, also face two government lawsuits.

The state attorney general sued in 2010, saying Buenrostro and Villalobos, along with other former pension board and staff members, participated in kickback scheme.

At that time, the attorney general obtained a court order freezing assets of Villalobos and his company in an attempt to recover more than $40 million in commissions. Villalobos filed for bankruptcy later in 2010. His assets included 20 bank accounts, two Bentleys, two BMWs, a Hummer, art worth more than $2.7 million and 14 properties in California, Nevada and Hawaii. None of Buenrostro’s assets were seized.

State attorney general spokesman Nick Pacilio said a trial is scheduled for Sept. 8 in San Francisco Superior Court.

The Securities and Exchange Commission has also filed a lawsuit in 2012, which is still pending.

In a related sanction, the state’s campaign watchdog, the Fair Political Practices Commission, fined other executives and investment managers in 2011 for failing to report gifts that included food, wine and baseball and Rose Bowl tickets.

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AP Writer Don Thompson in Sacramento contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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