A lawsuit against former CalPERS board member Alfred Villalobos filed by California Attorney General Jerry Brown could be blocked by a U.S. Bankruptcy Court judge.
Judge John Peterson is expected to decide within the next several weeks whether to block the suit that accuses Mr. Villalobos of bribing officials at the $206.7 billion California Public Employees' Retirement System.
Mr. Villalobos, a Stateline, Nev., placement agent, was sued for $95 million by the California Attorney General's Office in May. In June, Mr. Villalobos filed for Chapter 11 bankruptcy protection. The bankruptcy court is in Reno, Nev.
Federal law generally supersedes state law in such cases, so state officials have been seeking a ruling from Mr. Peterson that their case can proceed.
If Mr. Peterson rules to block the California lawsuit, the state could still pursue its claim in U.S. Bankruptcy Court. But the state's claim would be consolidated with other portions of the bankruptcy case and other creditors who are seeking payment in the Chapter 11 case.