Updated Nov. 5, 2009
Money managers paid a former CalPERS board member's placement firm a combined $65 million in fees to market funds to the system.
These types of payments moved CalPERS to launch an investigation in October into fees money managers paid placement agents and marketers to get investments from the system. The disclosures will be part of the special review conducted by law firm Steptoe and Johnson, wrote Brad Pacheco, CalPERS spokesman, in an e-mail response to inquiries.
Among the firms that hired ARVCO Capital Research are private equity firm Apollo Europe Management and real estate manager CIM Group. Both hired Alfred Villalobos, a former CalPERS board member, his children and his placement agent firm, ARVCO Capital Research, to market funds to the California Public Employees' Retirement System, Sacramento, according to placement agent disclosure documents from the $201.1 billion plan.
Neither Mr. Villalobos nor his firms have been charged with wrongdoing in any transactions.
CalPERS has made commitments to five CIM Group funds.
CIM states in the disclosure documents it hired ARVCO in 1998 and terminated the firm in 2000. ARVCO marketed the first two funds and CIM Group paid ARVCO $9.6 million.
CIM Group's contract with ARVCO also gave the placement firm 2% of commitments made by CalPERS and nine other institutional investors: California State Teachers' Retirement System; University of California, New York State Teachers' Retirement System, San Francisco City & County Employees' Retirement System, Los Angeles City Employees' Retirement System, Los Angeles County Employees Retirement Association, Getty Trust, California Institute of Technology and Stanford Investment Group.
The New York State teachers system is not an investor in a CIM Group fund, said John Cardillo, spokesman. Also, San Francisco City & County did not do business with CIM Group before Dec. 31, 2000, and the system had no contact or relationship with placement agent ARVCO Capital Research, said David Kushner, deputy director for investments.
In addition to Mr. Villalobos, CIM listed Mr. Villalobos' son, Alfred Villalobos II, as one of its ARVCO contacts.
Apollo Europe Management, a subsidiary of Apollo Management, also hired ARVCO on Jan. 25, 2008, and paid the firm 2.5% of the first $50 million CalPERS' committed. Apollo paid ARVCO $625,000, according to the disclosure documents. In addition to the senior Mr. Villalobos, Apollo listed Mr. Villalobos' daughter, Carrissa Villalobos, who was general counsel and chief of ARVCO's real estate division until 2008.
On Oct. 12, ARVCO registered ARVCO Capital parent, ARVCO Financial Ventures, as a broker-dealer with the SEC, Apollo documents state.