The SEC Monday charged the former CEO of the California Public Employees' Retirement System (CalPERS) and his close personal friend with scheming to defraud an investment firm into paying $20 million in fees to the friend's placement agent firms. SEC Findings and Allegations. Ex-CalPERS CEO Federico Buenrostro and friend, Alfred Villalobos, fabricated documents given to NY-based private equity firm Apollo Global Management.  Those documents were intended to fool Apollo into thinking that CalPERS had reviewed and signed placement agent fee disclosure letters in accordance with its established procedures. In fact, Buenrostro and Villalobos intentionally bypassed those procedures to induce Apollo to pay placement agent fees to Villalobos's firms.  The false letters bearing a fake CalPERS logo and Buenrostro's signature were provided to Apollo, which then went ahead with the payments. The SEC notes that Apollo began requiring signed investor disclosure letters in 2007 from investors such as CalPERS before it would pay fees to a placement agent that assisted in raising funds.  Villalobos's firm, ARVCO Capital Research LLC (which later became ARVCO Financial Ventures LLC), agreed to this contractual provision in a placement agent agreement with Apollo related to CalPERS's investment in Apollo Fund VII. However, when ARVCO requested an investor disclosure letter from CalPERS's Investment Office to provide Apollo, it was informed that CalPERS's Legal Office had advised it not to sign a disclosure letter.  ARVCO never again contacted CalPERS's Investment Office for an investor disclosure letter. In January 2008, Villalobos instead fabricated a letter using a phony CalPERS logo, then asked Buenrostro to sign what appeared to be a CalPERS disclosure letter.  Upon receiving the letter for Apollo Fund VII, Apollo management paid ARVCO about $3.5mn in placement agent fees. Easy as Pie. Perhaps seeing how easy it was to get paid using a false disclosure letter, less than 2 weeks later, the pair created false CalPERS disclosure letters for at least 4 more Apollo funds under similarly suspicious circumstances.  As part of the scheme, Buenrostro signed blank sheets of fake CalPERS letterhead that Villalobos and ARVCO then used to generate additional investor disclosure letters as they needed them.  All told, ARVCO was paid more than $20 million from Apollo for unjustified placement agent fees. SEC Sanctions. The SEC seeks to collect disgorgement of ill-gotten gains from Buenrostro, Villalobos, and ARVCO, as well as financial penalties.  According to the SEC's complaint, the defendants violated Section 17(a)(1) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c) thereunder. SEC L.A. Office Staff Credits. Investigation by Leslie Hakala;  litigation will be led by David Van Havermaat. For further details, go to: [SEC PR 12-73, 4/23/12] and [SEC Complaint].