By Andrew McIntosh
amcintosh@sacbee.com
Published: Monday, Feb. 22, 2010 – 12:00 am | Page 1A

When the former chief executive for CalPERS, Fred Buenrostro, moved the giant pension fund into the clean energy and technology sector three years ago, two of the businessmen who ultimately benefited were friends.

Al Villalobos, a former CalPERS board member who was so close to Buenrostro that he hosted his wedding, will pocket $432,800 in sales commissions for helping Enlink Geoenergy secure investment money from one of a half-dozen smaller clean energy technology funds backed by CalPERS.

Bryan L. Martel, a Nevada City resident, runs a company called Environmental Capital Group that was hired as a special adviser by Pacific Corporate Group, an investment firm that CalPERS brought in to manage its move into the sector, documents show.

Martel and Buenrostro – downhill skiing aficionados and occasional instructors at Squaw Valley ski resort in Lake Tahoe – have been friends for years, according to sources including Winston H. Hickox, former secretary of environmental protection under then-Gov. Gray Davis, who worked on clean-tech investment issues at CalPERS.

A spokesman for Pacific Corporate, the investment firm, said it chose Martel and his firm for its expertise and that the relationship between Martel and Buenrostro was not a factor in its decision.

Buenrostro declined to comment. Martel didn’t respond to repeated attempts to reach him, nor did Villalobos, a Nevada-based “placement agent” – or investment middleman – already under scrutiny for making millions from CalPERS through his pension fund connections.

CalPERS has been under fire for more than a year over questionable ties between its board members and executives, placement agents and investment firms. It has called on an outside law firm to scrutinize the deals, and Attorney General Jerry Brown is investigating.

Clean-tech fund launches

In February 2007, the California Public Employees’ Retirement System announced with great fanfare that it was committing $400 million to a private equity manager to invest in clean energy and technology companies.

In a news release, Charles Valdes, then chairman of CalPERS’ investment committee, said the fund’s $400 million would be overseen by Pacific Corporate Group of La Jolla. It was chosen over 12 other companies that sought the business, documents show.

Pacific Corporate would farm out chunks of the money to other, smaller startup clean-tech funds – an investment industry structure known as “a fund of funds.” The firm earned $2.4 million from CalPERS in 2007, according to CalPERS’ annual financial report.

Both Pacific Corporate and the smaller funds also put up some of their own money, becoming partners with CalPERS.

One of the smaller funds was Craton Equity Partners, which in turn invested in Enlink Geoenergy Services Inc., a geothermal heat pump maker.

That’s where Villalobos came in. His company, Arvco Capital Research, will earn its $432,800 commission for helping connect Enlink to Craton Equity Partners. Buenrostro went to work for Arvco last year after leaving CalPERS.

Enlink reported Arvco would be paid $150,000 immediately and the balance of the $432,800 later in documents filed with the Securities and Exchange Commission in March 2009.

Craton Equity Partners is run by Tom Soto, son of the late state Sen. Nell Soto. He did not respond to telephone messages requesting an interview.

Adviser fees confidential

Pacific Corporate hired Martel’s company to help select and monitor the environmental performance of its clean-tech investments.

The Web site for Martel’s company, Environmental Capital Group, says it hopes to counter climate change by significantly expanding private equity investment opportunities in clean tech.

But asking how much the company is being paid touches off a chain reaction that leads nowhere.

CalPERS spokesman Brad Pacheco said he could not provide that information, noting that the company is paid by Pacific Corporate, not the pension fund.

Pacific Corporate chief executive Christopher Bower declined to comment and referred questions to Dan Hilley, a Los Angeles-based crisis management publicist who was hired to handle media queries about the firm’s CalPERS deals.

Hilley said: “Remuneration is confidential.”

In a written statement, he said Environmental Capital Group is “comprised of a team of world class environmental experts that developed an innovative methodology for the monitoring and reporting of the environmental impact of clean energy and technology private investments and no other firm provides this level of capability.”

Past troubles for group

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