The fabricated document gave a false impression to Apollo that the letters were reviewed by CalPERS and signed placement agent fee disclosure letters in accordance with its established procedures.
Apollo paid more than $20m in placement agent fees, on the basis of false letters that bore a fake CalPERS logo and Buenrostro’s signature.
SEC’s Los Angeles Regional Office associate regional director John McCoy III said Buenrostro and Villalobos not only tricked Apollo into paying more than $20m in placement agent fees it would not otherwise have paid, but also undermined procedures designed to ensure that investors like CalPERS have full disclosure of such fees.
Villalobos’s firm ARVCO Capital Research approved this contractual provision in a placement agent agreement with Apollo related to CalPERS’s investment in Apollo Fund VII, said SEC.
When ARVCO sought 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.
Villalobos prepared a fabricated disclosure letter using a phony CalPERS logo and Buenrostro signed the CalPERS disclosure letter and received nearly $3.5m in placement agent fees form Apollo, the US watchdog alleged.
The SEC said that both cheated the equity firm on more than two occasions and has sought to seize any ill-gotten gains acquired by Buenrostro, Villalobos, and ARVCO, impose severe penalties and barred them permanently from conducting businesses.
