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From 2002 to 2008 Fred Buenrostro, a former deputy director of the state Department of Personnel Administration, was the chief executive of the California Public Employees Retirement System (CalPERS), the nation’s largest pension fund. In 2008 CalPERS paid Buenrostro an annual salary of $238,992, but that wasn’t enough for the government pension boss. As Dale Kasler notes in the Sacramento Bee, Buenrostro took more than $250,000 in bribes from former CalPERS board member Alfred Villalobos, a former deputy mayor of Los Angeles. The money was intended “to steer pension fund investments to the private equity firms he represented.”
Villalobos bagged $50 million helping those clients win investments from CalPERS. The investments proved “mostly profitable” for CalPERS, as Kasler reported, but CalPERS conducted an investigation and “concluded that it probably spent tens of millions of dollars in larger-than-necessary investment management fees because its bargaining power was undermined by Buenrostro’s actions.”
Villalobos killed himself last year, and on May 31, 2016, Buenrostro was sentenced to four and a half years in prison. A securities lawyer told reporters “this closes a dark chapter in the history of an institution that stood tallest when it mattered most.” Not so fast, Counselor. As Mr. Kasler reported on June 2, Buenrostro is “continuing to get pension payments from the very agency victimized by his crime.” His pension in 2008 was $16,800 a month and has now been reduced to a paltry $11,769 a month. CalPERS overpaid Buenrostro $360,000, but rather than have him pay it back all at once it’s helpfully deducting $5,135 a month from the convict’s continuing pension payout. “By the time he gets out,” Kasler explains, “he will be collecting 70 percent of his original pension—or $141,228 a year before taxes.”
Taxpayers are the real victims of this ruling-class rot. Under state law, Fred Buenrostro is still entitled to his pension, but taxpayers should not expect that to change. As long as duly convicted felons can continue collecting fat government pensions, the corruption is likely to continue. Jon Coupal of the Howard Jarvis Taxpayers Association once suggested that politicians get two terms, one in office and the other in prison. Perhaps that plan should be extended to government pension bosses.