Panel: CalPERS board member broke campaign law

Charles Valdes, a CalPERS board member, received illegal campaign donations, some from affiliates of Alfred Villalobos, head of placement agency ARVCO.

A California political ethics commission has found that Charles Valdes, a board member of the California Public Employees’ Retirement System, took illegal campaign contributions.

Some of the contributions came from people and companies affiliated with Alfred Villalobos, a former CalPERS board member who runs a placement agency, ARVCO Financial Ventures.

Valdes reportedly has a personal relationship with Villalobos, who reportedly took Valdes on a whirlwind, $15,000 trip to London, Dubai and Hong Kong to attend a two-day conference in Dubai in 2006, according to the Sacramento Bee. CalPERS approved the trip at the time, but no travel expenses have yet been filed with the pension, the article said.

The California Fair Political Practices Commission is recommending fining Valdes a total of $12,500 on five counts of accepting contributions in excess of the $3,300 campaign limit that was in place in 2005 during Valdes’ reelection campaign. The commission meets 10 December and will rule on the case, which could include a maximum fine of up to $25,000.

The commission’s investigation began after an audit of the campaign account for the reporting period 1 January 2005 through 31 December 2005. During the period, Valdes’ campaign received $38,600 and made no expenditures.

Valdes, who has been a CalPERS board member for more than 20 years, told the commission he and his campaign treasurer, Billy Hughes, mistakenly believed the campaign limit was $5,600 per donation.

More than $20,000 of the contributions came from former employees and a company associated with Villalobos. For example, Villalobos’ daughter, Carrissa Villalobos, gave $5,600 to the campaign. Capital Formation Partners, one of Villalobos’ companies, also gave $5,600.

ARVCO secured about $4 billion in commitments for its private equity clients from CalPERS after Villalobos’ associates made the campaign donations in 2005.

With ARVCO as placement agent, CalPERS committed $1 billion to Apollo Investment Fund VII in 2008; $650 million to Apollo Investment Fund VI in 2006; $800 million to Apollo Special Opportunities Managed Account in 2007; $400 million to Aurora Resurgence Fund in 2007 and $500 million to PCG Corporate Partners II in 2007.

CalPERS has been investigating fees paid by some of its fund managers to placement agents, including the more than $50 million Apollo paid to ARVCO over five years. CalPERS has also reportedly been reviewing its relationship with Apollo, including fees paid.

Villalobos is not accused of any wrongdoing. He has said he is cooperating with CalPERS’ review. “For the record, [ARVCO] does not make recommendations to CalPERS or any other investor. We introduce and present investment opportunities to them. The staff, consultants and advisors are the ones who make recommendations on investment opportunities after completing their due dilligence [sic] process.”