Former Calpers Chief Indicted Over Alleged Fraud

March 19, 2013

The New York Times on March 18, 2013 released the following:

“BY PETER LATTMAN

As head of the country’s largest pension fund, Federico R. Buenrostro wielded vast influence in the money management world.

From 2002 to 2008, Mr. Buenrostro served as chief executive of the California Public Employees’ Retirement System, or Calpers, which allocates more than $200 billion to investment firms across the globe.

Federal prosecutors say that Mr. Buenrostro abused that position. In an indictment filed in Federal District Court in San Francisco on Monday, the United States attorney charged Mr. Buenrostro and his friend, Alfred J. Villalobos, with defrauding the private equity firm Apollo Global Management.

The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how their state pension funds were invested.

The scandals focused on the role of middlemen, or placement agents, who charged lucrative fees to help money managers win business from state pension funds. In some cases, placement agents proved to be unlicensed fixers who received illegal kickbacks from pension officials. A number of pension officials and middlemen have served prison time, including Alan G. Hevesi, the former head of New York’s state pension fund.

The government claims that Mr. Buenrostro and Mr. Villalobos invented a crude scheme that tricked Apollo, one of the world’s largest private equity firms, into paying Mr. Villalobos at least $14 million in fees for his help in securing an investment from Calpers.

“We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,” Rob Feckner, the board president of Calpers, said in a statement.

A lawyer for Mr. Buenrostro, William H. Kimball, declined to comment. Mr. Villalobos, who filed for personal bankruptcy in 2010, could not be reached for comment.

In the insular world of private equity, the charges struck many executives as unusual given Apollo and Calpers deep and lucrative ties. The California fund has invested at least $3 billion with Apollo, including a 2007 transaction in which it paid $600 million for a 9 percent stake in the firm.

For years, Apollo had retained Mr. Villalobos — a former Calpers board member — as a placement agent, agreeing to pay him for his help in securing investments from state pensions. Apollo paid at least $48 million in fees to Mr. Villalobos for his help in arranging for Calpers and other pensions to invest in its firm.

But to comply with securities laws and avoid perceived conflicts of interest, Apollo asked that Mr. Villalobos disclose to Calpers that he would receive payments related to the pension fund’s investments.

Prosecutors said that Mr. Buenrostro, 64, and Mr. Villalobos, 69, worked together, and fabricated letters from Calpers that purportedly signed off on the payments from Apollo to Mr. Villalobos.

“The allegations in the indictment unsealed today by the United States Department of Justice, if true, are troubling,” Charles V. Zehren, an Apollo spokesman, said Monday. “Apollo has always followed best practices in handling its placement agent relationships, and was not aware of any misconduct engaged in by Mr. Villalobos during the time that he worked with Apollo.”

The charges come after a civil lawsuit brought last year against Mr. Buenrostro and Mr. Villalobos by the Securities and Exchange Commission. And in 2011, a Calpers internal investigation concluded that Mr. Villalobos had turned Mr. Buenrostro into “a puppet” who directed Calpers investments to his clients. The firm’s report said that Mr. Villalobos lavished bribes on Mr. Buenrostro, including trips on private jets and gambling junkets at Nevada casinos.

When Mr. Buenrostro left Calpers in 2008, he took a job working with Mr. Villalobos as a placement agent.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Documents show US has arrested Iranian scientist

January 26, 2012

The Associated Press (AP) on January 26, 2012 released the following:

“By DOUGLAS BIRCH and PAUL ELIAS
Associated Press

WASHINGTON (AP) — The United States has arrested and charged an Iranian semiconductor scientist with violating U.S. export laws by buying high-tech U.S. lab equipment, a development likely to further worsen Iranian-U.S. tensions.

Prison records show the U.S. is holding Seyed Mojtaba Atarodi, 54, a microchip expert and assistant professor at Tehran’s prestigious Sharif University of Technology, in a federal facility in Dublin, Calif., outside San Francisco. The Iranian interest section in the Pakistani embassy in Washington said it was aware of the arrest.

Atarodi arrived at a bond hearing in federal district court in San Francisco Thursday wearing a green jump suit and bowed to his attorney. Before the hearing began, the judge closed the courtroom except to attorneys and members of the family. According to friends, Atarodi was detained Dec. 7 after stepping off a plane in Los Angeles.

Dr. Fredun Hojabri, a former vice chancellor of Sharif University who now lives in the U.S., said he was aware of the case and noted that friction between the U.S. and Iran has long posed problems for Iranian researchers.

U.S. law enforcement officials have declined to discuss any aspect of Atarodi’s case, and records indicate the charges have been sealed.

But a Sharif University spokesman said he has been charged with buying instruments from the United States. The university official spoke only on condition of anonymity because of the potential repercussions of the case.

The arrest comes as the U.S., Israel and their allies are using diplomacy, sanctions and intelligence efforts to try to cripple what they suspect is Iran’s drive to lay the foundations of a nuclear weapons program.

Atarodi is listed as the author or coauthor of dozens of scientific papers dealing with microchip technology, though none appears to be explicitly related to military work. U.S. officials in the past have targeted suspected export control violators dealing in so-called dual-use technology, which can have both civilian and military applications.

The Sharif University spokesman said Atarodi was engaged only in civilian research. “The fact of the matter is that he was just a professor, and he was trying to buy some equipment for his lab, and the equipment was very, very simple, ridiculously simple stuff that anybody can buy,” the spokesman said.

The arrest of an Iranian scientist in a U.S. embargo case is rare, with most cases focusing on low-level middlemen living in the U.S. recruited to act as fronts for purchasers in Iran. But Iranian researchers in recent years have become central figures in the struggle between Tehran and the West over the country’s extensive nuclear programs, which the International Atomic Energy Agency says has included arms-related research.

At least four Iranian scientists have died under mysterious circumstances over about the past two years, and Israel is suspected of playing a role in the attacks.

In the most recent incident, Mostafa Ahmadi Roshan, a chemist and official at Iran’s Natanz uranium enrichment plant, was killed by a car bomb Jan. 11, reportedly while on his way to a memorial service for a scientist slain a year earlier.

For years, Iran has insisted it is only interested in the peaceful uses of atomic energy and has resisted United Nation demands that it abandon its extensive uranium enrichment efforts. Enrichment technology can be used to make fuel for nuclear reactors or fissile material for bombs.

The U.S. and Israel, meanwhile, are believed to have recruited Iranian scientists as agents or encouraged them to defect.

A friend of Dr. Atarodi’s, John Choma, a professor of electrical engineering at the University of Southern California, said he learned of the arrest from Atarodi’s brother, who lives in the Los Angeles area. The brother did not respond to requests for an interview.

Hojabri cited an incident in 2006 when more than 50 Iranian scientists, executives and engineers headed for a forum on disaster management in Santa Clara, Calif., were detained and expelled after their arrival because their visas were revoked. The event was organized by a Sharif University alumni group.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.