Personnel Chief Denies Link to Pension Scheme : Crime: But sources familiar with the case say federal officials are investigating the former CalPERS trustee.

Federal authorities in New Jersey are investigating the head of California’s State Personnel Board in connection with an unsuccessful scheme to defraud the state employees’ pension system out of $100 million, sources familiar with the probe said Wednesday.

However, Personnel Board President Richard Chavez, who was the agency’s representative on the California Public Employees Retirement System’s board of trustees from 1985 through 1989, told a Times reporter that he has no knowledge of such a scam and that he has not been approached by investigators.

Chavez, a 47-year-old businessman living in Whittier, said that since leaving CalPERS he has introduced several individuals seeking pension fund business to current members of the board.

“A lot of people get ahold of me who try to bring deals,” Chavez said in a telephone interview. He said he has made a particular point of helping minority businessmen who might be intimidated by the sheer size of the $62.4-billion pension fund--the biggest public retirement system in the country. “I champion minority representation,” he said.

“If a tinge of something looks bad, I wouldn’t touch it with a 10-foot pole,” he said, pointing out that CalPERS is extraordinarily careful in placing its investments.

Earlier this week, a con man pleaded guilty in a Newark courtroom to felony conspiracy charges that included the failed attempt to secure $100 million from CalPERS.

The con man, Marshall A. Zolp, was first jailed in 1986 for bilking investors in a scheme to market a “self-chilling” beer can. Those who have dealt with Zolp say he is an unrelenting schemer whose suave appearance is sometimes compared to actor George Hamilton, but without the tan.

Zolp, who has also used the name Alex Seagrove, told the court on Tuesday that, while on parole from federal prison and living in a half-way house in Huntington Beach last year, he approached a former CalPERS board member about the investment scheme.

In exchange for helping Zolp, the board member was to receive 10% of the investment, according to a press release issued by the U.S. Attorney’s Office in Newark, following Zolp’s guilty plea on charges that he had conspired to violate the federal racketeering law.

The former CalPERS trustee was to receive “a 10% kickback on the monies invested,” said the prosecutor’s statement. “The kickback was to be hidden in offshore accounts in the name of a shell corporation.”

Zolp, who has been in federal custody since last November because of a parole violation, now faces an additional sentence of up to 20 years and a $250,000 fine. He has agreed to cooperate with authorities, sources said.

According to the prosecutor’s statement, Zolp concocted a special kind of security called a Gross Revenue Investment Dividend or “GRID,” which promised “potentially extra-ordinary returns without the risk of incurring debt or equity partners traditionally associated with such ventures.”

According to the prosecutor’s statement, the unidentified former CalPERS board member was to have arranged for $100 million in pension fund money to be invested in GRIDS.

Neither the release nor court documents name the one-time CalPERS board member described in the press statement and court documents.

And Assistant U.S. Attorney Kimberly A. McFadden said she could neither confirm nor deny that Chavez is an unindicted co-conspirator in the case. She said that a grand jury investigation of the fraud scheme is continuing.

However, several sources familiar with the New Jersey grand jury probe said the former CalPERS member is Chavez, a Southern California businessman who is a co-owner of Chavez & Associates Institute, a private vocational school in the City of Commerce.

Among his accomplishments are appointments to numerous boards and commissions by politicians of both parties, including a presidential appointment to the U.S. Architectural and Transportation Barriers Compliance Board.

As a Democrat, Chavez was first appointed to the five-member State Personnel Board by Democratic Gov. Edmund G. Brown Jr. in 1981. By 1985, Chavez had reregistered as a Republican and was reappointed to the personnel post by Republican Gov. George Deukmejian. The part-time position currently pays $29,354, plus expenses for the board’s twice-a-month meetings.

The Personnel Board, which is responsible for administering the state’s civil service system, reviews hiring and promotion practices and acts as an appeals board when state workers contest on-the-job discipline and firings.

From 1985-1989, Chavez served on the CalPERS board, after being chosen by his fellow Personnel Board members for the position.

In an interview with a reporter, Chavez pointed out that he is no longer a CalPERS board member, but that state rules bar him for two years from receiving any payments from individuals doing business with the pension fund. “I can’t take stock. I can’t take a commission.” He said that any investment opportunities offered to CalPERS board members must meet strict tests of their soundness. “If you had the greatest deal in the world, you have to go through all kinds of processes.”

Asked about Gross Revenue Investment Dividends, he said, “GRID means something to me on a football field.” Chavez said he could not recall the names Zolp or Seagrove, nor could he remember any contact with Zolp’s companies.

Chavez said he was upset about being linked to Zolp. “All your life you live with integrity and then people try to drag you down,” he said, later adding, “It irritates me. I’ve been with the State Personnel Board for years. It just taints my name.”