Gilbert W. Chilton, the former head of the state Teachers Retirement System who fled to avoid prosecution in a $50-million bribery and extortion scheme, surrendered to federal authorities Friday after evading capture for nearly four years.
Saying that he is penniless and "tired of being a fugitive," Chilton walked into the U.S. attorney's office here, accompanied by a former Las Vegas hat check girl who apparently went underground with him in July, 1983, after a federal warrant was issued for his arrest.
"Agents have been scouring the country looking for Mr. Chilton and we've been just behind him on a few occasions," said U.S. Atty. David F. Levi. "He's tired of running and I'm told he's broke."
Chilton, 42, was arraigned on three counts of bribery and extortion in connection with the state pension scheme, as well as 70 counts of embezzlement in the theft of more than $440,000 from the Guarantee Savings & Loan Assn. in Fresno, where he once worked. He also faces tax evasion charges.
Chilton, who allegedly split a $1.5-million kickback on a $50-million state pension fund loan to a Colorado oil company with an accomplice, entered pleas of not guilty to all the counts. He was assigned a court-appointed attorney after he told U.S. Magistrate Esther Mix that he cannot afford a lawyer. He is being held without bail.
Chilton was appointed to the board of the State Teachers Retirement System in 1982 by Gov. Edmund G. Brown Jr. and became chairman six months later. Shortly thereafter, he helped pushed through the $50-million loan from the teachers' pension fund to Txpacco Inc., a small Denver oil firm that had almost no assets.
Prosecutors allege that Henry J. Raymond, a convicted swindler, since deceased, who operated the oil company, agreed to pay Chilton and his accomplice, Beverly Hills lawyer Anthony J. Truex, the $1.5-million kickback in return for their help in securing the loan.
Cory Not Implicated
Chilton engineered the loan with the aid of then-state Controller Ken Cory at a time when the two sat on a special retirement system investment committee. Cory has not been implicated in the criminal action and has defended the loan as basically sound. In fact, the state has since recovered nearly all of the $50 million it loaned to Txpacco.
Nonetheless, Cory, who decided last year to retire from public life, is likely to figure prominently in Chilton's trial, which is scheduled to begin Sept. 29 in Fresno.
After pleading guilty last year to two counts of extortion, Truex told investigators that the loan scheme involved a tacit agreement between Chilton and Cory to support each other's investment proposals.
In a written statement to the court, Truex said Chilton was successful in obtaining the $50-million loan "because he had an agreement with Ken Cory that Ken Cory would vote for proposals advanced by Chilton with respect to investments and, in return, Chilton would vote for investments proposed by Cory."
A spokesman for the private investment firm where Cory now works said Cory "would have no comment" on Chilton's surrender.
Agrees to Cooperate
Truex is completing a three-year prison term and has agreed to cooperate with investigators as part of a plea bargain. Levi said that no further arrests are pending, but emphasized that the investigation is continuing.
"I'm not going to talk about any other people," Levi said in response to a question about where the inquiry may lead. "Our investigation is obviously open and will continue."
The pension fund loan raised questions initially because the three-member investment committee went against its staff's recommendation in approving the deal. As suspicions grew, Chilton abruptly resigned his pension fund post, quit his job at the Fresno bank he managed and fled in a $50,000 Mercedes-Benz with a young woman at his side, leaving behind his wife and child.
Chilton reportedly contacted a federal public defender two weeks ago to make arrangements for his surrender. According to Levi, he was not offered a deal in exchange for turning himself in.
The woman with whom Chilton fled, Cheryl Ann Ciccarrelli, then a 26-year-old hat check girl, had been sought as a material witness. She was not charged and was released Friday after being questioned by federal authorities.
Levi said federal agents still do not have a complete picture of the pair's activities or of their whereabouts during the four years they evaded capture. However, there were reports that Chilton had been spotted in Florida and the Caribbean. At one point, he was rumored to have been killed.