By Dale Kasler
Published: Wednesday, Nov. 25, 2009 – 12:00 am | Page 16A

A CalPERS board member paid $67,000 to settle a civil fraud lawsuit tied to a political corruption probe in a Los Angeles suburb.

Louis F. Moret, appointed to a four-year term on the Cal-PERS board in February 2008, was sued by the city of South Gate after testifying in a criminal trial about his role in steering city contracts to preferred bidders. Four men were given prison sentences, including a powerful city treasurer whom Moret considered a protégé.

Moret, who was a $12,000-a-month city consultant, wasn’t charged with a crime. A prosecutor was quoted later as saying the evidence against him was too weak.

CalPERS spokesman Brad Pacheco said the pension fund wasn’t aware of the civil settlement until an inquiry by The Bee this week. The settlement was finalized last December.

Moret is the second Cal-PERS board member facing controversy over his business practices.

His colleague Charles Valdes recently acknowledged taking a round-the-world trip with Albert Villalobos, a former CalPERS board member who’s earned more than $60 million representing clients who got investment deals from the pension fund. Valdes produced a check showing that he reimbursed Villalobos. A state audit showed that Valdes took campaign contributions from Villalobos associates that exceeded legal limits.

The California Public Employees’ Retirement System recently launched a “special review” of Villalobos and other so-called placement agents. The fund is also sponsoring legislation to clamp down on their activities.

Moret’s settlement stemmed from a massive bribery case in the blue-collar city of South Gate, southeast of Los Angeles. He testified that he helped steer city contracts to bidders favored by South Gate’s treasurer, Albert Robles.

After being sued by the city, Moret agreed to the $67,000 settlement without admitting wrongdoing.

In addition, he also promised to refrain from “considering or voting on any matter that is under consideration or brought before the CalPERS Board that directly affects or impacts South Gate,” according to the settlement document.

South Gate municipal employees are among CalPERS’ 1.6 million members.

No issues involving South Gate have come before the board in the past year, but Moret informed Cal-PERS this week “that he’s taken it upon himself to uphold the agreement to recuse himself,” Pacheco said. He declined further comment.

Moret couldn’t be reached for comment; his lawyer Guy Lochhead declined to discuss the settlement.

One of the men sent to prison in the South Gate criminal case, Edward T. Espinoza, identified himself in campaign-finance records in 2002 as an employee of Arvco Capital Research, one of Villalobos’ placement agent companies.

Espinoza, of Summit, N.J., served a 10-month prison term after pleading guilty to fraud and money laundering. He admitted he served as a conduit for contractors bribing the treasurer.

It doesn’t appear that Espinoza was working for Arvco while participating in the South Gate scheme. A lengthy Justice Department summary of the criminal case, filed with the 9th U.S. Circuit Court of Appeals, mentions two other firms for which Espinoza worked, but not Arvco.

His defense lawyer, Nathan Hochman, said he had no information about Espinoza’s work at Arvco. Efforts to locate Espinoza for comment were unsuccessful. Villalobos didn’t return a reporter’s calls to his office in Stateline, Nev.

Moret, 65, is a business consultant and professional boxing referee; he’s handled fights involving the likes of Lennox Lewis and Oscar De La Hoya. He has worked in municipal bond finance and served 17 years on the board of Los Angeles’ police and fire pension fund. Last year he became the “public representative” to the CalPERS board, appointed by then-Assembly Speaker Fabian Nuñez and the Senate Rules Committee.

Nunez told the Los Angeles Times in June 2008 that he chose Moret as a compromise when three unions were lobbying for different candidates. Nuñez said he knew Moret was being sued but he wasn’t aware of his testimony in the criminal trial.

According to the trial transcript, Moret testified in U.S. District Court that Robles, the treasurer, arranged to have the city hire him as a consultant in 2001. Robles is now serving a 10-year term at a federal prison in Kern County.

Moret considered himself Robles’ mentor, having once advised him to run for South Gate treasurer instead of the state Legislature. He said Robles wanted to use his base in South Gate “to build a power machine.”

Moret’s City Hall job included overseeing the awarding of contracts.

“I was the facilitator,” Moret told the jury.

According to prosecutors, contractors funneled $1.4 million in kickbacks to Robles. In turn, Robles made sure they won city business.

Moret testified he helped Robles steer three separate contracts in 2001 to bidders preferred by the treasurer.

In one deal, he said he warned Robles the company the treasurer preferred for a sewer-repair contract wasn’t the low bidder. “Boy, your friends are pigs,” Moret told Robles.

Robles said he’d “take care of it.” The firm changed its bid and won the contract.

On a $48 million trash-hauling contract, Robles told Moret that his “horse in the race” was a firm named Klistoff & Sons Inc., according to Moret’s testimony. Klistoff’s vice president received a six-month prison sentence after pleading guilty to a scheme to defraud the city.

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