A former state pension board member at the center of a long-running influence-peddling scandal that rocked state government committed suicide Tuesday, just weeks before the start of his federal trial on bribery and fraud charges.
Police in Reno confirmed that former Los Angeles Deputy Mayor Alfred J.R. Villalobos, 71, took his own life in the city where he lived in recent years. The Washoe County medical examiners office declined to provide further details.
Villalobos was a California Public Employees' Retirement System board member from 1993 to 1995, and then became a high-stakes placement agent helping hedge funds and others win CalPERS business.
Last year, he was indicted in U.S. District Court in San Francisco on corruption charges in connection with his efforts to influence the pension funds' investment decisions. Villalobos, who pleaded not guilty, earned about $50 million between 2005 and 2009 as a middleman in winning CalPERS investments for private equity clients.
"He was more than ethically challenged," said former Los Angeles Mayor Richard Riordan, who said he fired Villalobos in 1993 after five months on the job. "He was so bad that I went out of my way to recommend that they not put him on the CalPERS board."
According to his attorneys, Villalobos had been ill for at least the last two years. San Jose lawyer Bruce Funk filed papers in U.S. District Court in San Francisco on Monday saying that he was too sick to stand trial in late February. Funk said his client was "incoherent" and "had difficulty communicating and following a conversation."
He was "in and out of the hospital" in "constant pain" because of a neurological disorder, said Sheila Van Duyne, a Reno attorney who helped with his defense. She recalled him as a family man who worried about the effect of his legal problems on his relatives.
Federal prosecutors at the U.S. attorney's office in San Francisco issued no statement regarding the death.
His death brought to a halt criminal legal proceedings against him. However, his former co-defendant, Federico Buenrostro Jr., still faces sentencing.
Buenrostro, 65, pleaded guilty last year to one charge of conspiracy and cooperated with prosecutors. Buenrostro of Sacramento was chief executive of CalPERS from 2002 to 2008 and was a close friend and later business associate of Villalobos.
Buenrostro told federal officials that he took more than $250,000 in bribes and other valuable gifts from Villalobos. Much of the money was delivered personally in paper bags and shoe boxes at a Hyatt Hotel across the street from the state Capitol in downtown Sacramento.
Last August, Villalobos and Buenrostro were charged with conspiring to create phony documents to satisfy a request for legitimate records from Apollo Management, a Wall Street private equity firm. Villalobos helped Apollo land a $3-billion CalPERS investment deal. Apollo, which has not been accused of wrongdoing, paid Villalobos $14 million in fees.
The death should not affect Buenrostro's case, said William Portanova, Buenrostro's lawyer.
"He told the entire truth. It's a matter of record," Portanova said. "The court and federal prosecutors gave the full credit he deserves for the assistance he provided."
Buenrostro faces a maximum sentence of five years in federal prison, Portanova said.
The unexpected end to Villalobos' criminal prosecution should close a more than seven-year saga involving corruption and deal-making at CalPERS, beginning in 2009.
The nation's largest public pension fund currently has $293 billion in assets and provides retirement security to 1.7 million state and local government workers, retirees and their families.
The scandal brought discredit on the CalPERS board of administration with allegations of misbehavior involving two members who reportedly pressured a benefits firm to pay $4 million in fees to Villalobos, according to a 2011 CalPERS internal investigation by outside attorney Philip Khinda.
The pension fund responded to the scandal by making a number of changes in its governance and ethics policies, including support for a law requiring investment middlemen to register with the state as lobbyists. The Legislature also slapped tough new rules for placement agent registration and financial disclosure.
In statement, a CalPERS spokesman said the agency remains "focused on supporting law enforcement authorities as they pursue bringing justice to those who broke the law and violated the trust placed in them by the public employees of California."
Villalobos was Los Angeles deputy mayor in charge of economic development but resigned in December 1993 following revelations about his finances.
Villalobos was divorced and survived by two sons, a daughter and several grandchildren, said Van Duyne, the Reno lawyer.