CALPERS lawyer delivers report on Board bribery and corruption

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A lawyer hired to investigate bribes and kickbacks at one of the nation’s largest pension funds, the California Public Employees’ Retirement System, said on Monday its former board member Alfred Villalobos, corrupted top officials there and likely cost the fund tens of millions of dollars in extra investment fees.

Independent attorney Philip Khinda reported that Villalobos, a so-called “placement agent,” corrupted five senior CALPERS officials including former CEO Fred Buenrostro, former board members Charles Valdes, Kurato Shimada and Robert Carlson, and former investment officer Leon Shahinian.

Both Villalobos and Buenrostro have been sued by the state’s attorney general and federal prosecutors are conducting their own investigation.

Authorities claim that a handful of investment firms paid Villalobos and his cronies over $50 million in secret fees to help make introductions and convince CALPERS executives to do business with them. Buenrostro attempted to shield Villalobos from legal liability by signing papers saying that CALPERS was aware of the fees that Villalobos was collecting.

In his 56-page report, Khinda said that Villalobos created a perception that investment firms needed to pay for connections to secure business for their firms.  The firms likely inflated their fees they charged CALPERS in order to offset the secret fees paid to Villalobos.

Since the scandal was discovered, Khinda has renegotiated deals with the investment firms that were clients of Villalobos and obtained over $300 million in fee discounts.

In a matter unrelated to the investment firms, Khinda’s report provides details about a $4 million consulting paid to Villalobos by Medco Health Solutions, a New Jersey company that handles the CALPERS employees’ drug benefit plan.

In 2005, when the drug administration contract came up for bidding, a copy of an internal CALPERS report was leaked to Medco that showed that the company was the leading contender for the contract. The contract was worth $8 million annually.

After Medco was awarded the contract, the company began paying Villalobos an additional $20,000 per month in consulting fees until 2009, when the scandal was first reported.

CALPERS has since enacted new rules and reform procedures including a prohibition on the payment of “placement” fees by investment firms.

The Sacramento Bee

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

New York state lawmakers indicted on bribery and money laundering charges

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

N.Y. State Sen. Carl Kruger and Assemblyman William Boyland surrendered to authorities on Thursday, after being charged for allegedly selling their influence to hospitals, real estate developers and lobbyists.

N.Y. Sen. Carl Kruger allegedly took over $1 million to grant political favors.

Prosecutors said that Kruger, a longtime Brooklyn Democrat, received over $1 million in bribes since 2006. Much of his illegal activities were connected to prominent Albany lobbyist Richard Lipsky, with whom he shared fees, and then took “the very official acts in favor of which Lipsky had been paid to lobby.”

In one instance, Kruger helped steer $500,000 in taxpayer monies to one of Lipsky’s clients.

The court documents claim that Kruger regularly worked with Lipsky to ensure that his clients received favorable treatment on issues that required government approval. Kruger sought to conceal the bribes and kickbacks, passing them through a bogus company called Adex Management, and then further through a shell company, Olympian Strategic Development.

Olympian was controlled by Dr. Michael Turano, the son of Kruger’s close friend Dorothy Turano, a local community board director.


Boyland, a four-term Democrat, was hired as a “no-show employee” at Brookdale Hospital, which at the time, was seeking approval in Albany for its expansion plans. Boyland picked up $177,000 under the sham arrangement.

Besides the lawmakers, several others were indicted in illegal schemes. David P. Rosen, of Medisys Health Systems, who gave Boyland the “no-show” job; hospital executives Robert Aquino and Solomon Kalish; real estate developer Aaron Malinsky and Dr. Turano.

The 53-page complaint detailed the FBI’s investigation which included bugs on Kruger and Lipsky’s phones, recording months of conversations and regular surveillance.

The men were charged on various counts of bribery, mail and wire fraud, and money laundering.

Preet Bharara, of the U.S. Attorney’s office in Manhattan said “Once again I am here to report, sadly, that the crisis of corruption continues in Albany.  Every single time we arrest a state senator or assemblyman it should be a jarring wakeup call,” he added. “Instead, it seems like no matter how many times the alarm goes off Albany just hits the snooze button.”

Information from The New York Times

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Indiana Secretary of State faces new charges following voter fraud indictment

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

The newly-elected Indiana Secretary of State, Charlie White, is facing new charges only one week after he was indicted on seven felony counts, including voter fraud, perjury, theft and financial fraud – all stemming from allegations that he lied about his address on government and loan documents.

The theft charge stems from allegations that he took a paycheck from a local town council after the date he claimed to have moved.

Two special prosecutors have asked the Indiana inspector general to investigate whether White improperly accessed a file prepared by former Secretary of State Todd Rokita detailing evidence against him, after he took over the office in January.

The file contained a special report which was prepared for the Indiana Recount Commission, which in December, decided 2-1 that White was eligible to run for office even though he wasn’t properly registered at the time.

The report was given to the prosecutors, John Dowd and Dan Sigler, who presented the information to the Hamilton County grand jury. The grand jury indicted White based on the evidence.

Only last week, White was indicted on charges that he voted in Hamilton County in the May 2010 primary using the address of his ex-wife. He claims that it was an honest mistake and blamed it on his busy schedule.

Indiana Gov. Mitch Daniels called for White to step down but White said in a statement “I believe the evidence will prove that I did not intentionally break any laws. But more importantly, I will continue to do the job I was elected to do and carry on serving the needs of Hoosier taxpayers.”

White won by a large margin in the November election. If convicted, he will be required to step down from office.

Indystar.com

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Ohio prosecutor big on hiring family for government jobs

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

Cuyahoga County Prosecutor Bill Mason doesn’t seem to have a good sense of what the term nepotism means, if his record on hiring relatives is any indication. At last count, at least 13 members of his extended family work in local government, including four in his own office.

The Cleveland Plain Dealer reports that by Mason’s own account, he has 119 family members, owing in large part to his 15 brothers and sisters. The Plain Dealer examined public records for their story and found that Mason’s relatives earned more than $2.2 million thus far.

Not included in the total are the monies paid to Mason’s wife Carol, who has billed Parma $36,000 for process-service work since 2007. Mason’s connection with Cleveland suburb dates back to 1991, when he won a city council seat there.

“These people in Cuyahoga County,” said government watchdog Henry Eckhart of Common Cause Ohio, “seem to have a habit of taking in each other’s relatives and getting them jobs.”

Some other details provided by the Plain Dealer:

• The county engineer hired brother Edward Mason in 2006 as a sewer maintenance worker, a $34,000-a-year job that officials have no record of advertising to the public. Months later, Edward Mason tested for and won a slightly higher-paying job in the office. And in 2009, he resigned, then was rehired a week later for a $68,000-a-year job as a carpenter.

• Niece Melinda Kowalski got her first public job in Parma in 1996. She was a summer intern for O’Malley from 2000 to 2003 before her uncle hired her, first as a law clerk, then as an assistant prosecutor. After several raises that brought her pay to $52,000 a year, she resigned in 2008. Then-Attorney General Richard Cordray, a Democrat, hired her in 2009. She remains on the payroll as an assistant attorney general under new Republican boss Mike DeWine.

• Former Parma Treasurer Jack Krise Jr., who made Mason’s brother Michael his deputy in 1991, was hired in 2005 as an administrative assistant in the prosecutor’s office.

• Shannon DiBacco Bodach, hired in 2010, makes $28,000 a year as a full-time Mason paralegal despite listing no legal education or training when applying. Bodach, who was engaged to Mason’s nephew at the time, listed two retail jobs and an associate’s degree in massotherapy.

Despite many of the positions filled by Mason relatives were never publicly advertised, Mason said in a statement, “I, of course, take full responsibility for all those who work for me. I do not hire people because of who they are nor do I discriminate against them for those reasons.

“I ensure that the people who work for me are of the highest ethical caliber, qualified, and hardworking and motivated. The composition of my staff reflects this principle.”

The Plain Dealer

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Seattle highway project skids out of control

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

Washington state’s auditor, responding to a whistleblower complaint, found that a road widening project on Highway 18, southeast of Seattle, cost taxpayers $98.5 million, even though it was approved by the Department of Transportation at an original bid of $55.9 million in 2003.

A state Department of Transportation worker called the runaway costs to the attention of the state auditor, who agreed that the public works project unnecessarily wasted large amounts of taxpayer funds, according to a story in The Seattle Times.

The report, which was released on Monday, said in part, “Based on our investigation … we find reasonable cause to believe an improper governmental action occurred. We found … failures in the design process, a lack of control and oversight during construction, failure to monitor wetland areas that resulted in environmental violations and fines. This resulted in a gross waste of public funds.”

The project included bridges and retaining walls, and was located in a wetlands area. The highway was widened to four lanes, over a distance of 21 miles.

The state auditor blamed most of the cost of the overruns on design mistakes, payroll errors, sloppy work and what was called “constantly changing environmental regulations.” The report said that workers regularly dumped logs and other debris in environmentally sensitive areas, resulting in fines of nearly $200,000.

The project was also doomed from the start in some respects, since the original design was based on digital three-dimensional aerial models, which proved to be inaccurate in the heavily wooded areas. Much of the design work in those areas had to be reworked.

During the course of the 5 year project, 156 change orders were issued by the DOT.

“This was a case where we fully recognized that we had problems with the project,” said Transportation Secretary Paula Hammond of the auditor’s investigation into the project. “This wasn’t new news for us.”

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon