By Dale Kasler
Published: Tuesday, Jul. 20, 2010 – 12:00 am | Page 6B
Last Modified: Tuesday, Jul. 20, 2010 – 8:26 am

RENO – Alfred Villalobos, the former CalPERS board member accused of bribery, said Monday he plans to sue the pension fund for spreading lies about him.

Villalobos said he will sue the California Public Employees’ Retirement System for $10 million, though he didn’t say when. “You know that they lied publicly and said things that weren’t true,” he said in U.S. Bankruptcy Court.

The Nevada businessman said he’s also considering suing California Attorney General Jerry Brown, adding that his office has “violated my civil rights.”

Brown’s office sued Villalobos in May for $95 million, alleging he bribed then-CalPERS Chief Executive Fred Buenrostro and two other fund officials in order to steer billions in investments to his Wall Street clients. Among other things, the civil suit says Villalobos paid for their travel, hotel and entertainment.

Buenrostro also was sued, but the other two – former board member Charles Valdes and now-suspended investment officer Leon Shahinian – weren’t. The state obtained a court order in Los Angeles freezing most of Villalobos’ multimillion-dollar fortune.

Villalobos filed for bankruptcy protection a month later. On Monday, he said he had to seek bankruptcy protection because of the lawsuit and freeze on his assets. Testifying at an informal hearing, he said he’s had to rely on the generosity of relatives to make ends meet. “My two daughters-in-law have been gracious – they bring me food,” he said.

“Thank God there are humans on earth who are more compassionate,” he said, alleging that the state wants to keep him impoverished.

Deputy Attorney General Jon Ichinaga asked him why he didn’t seek an allowance from the court-appointed examiner who has control of his assets. Villalobos replied that he would have had to prepare a detailed accounting of his finances, risking perjury if there were errors, and “only an idiot would do that.”

The state has wanted Villalobos’ assets frozen because it says he has squandered tens of millions of dollars on gambling debts and could dissipate his fortune before the state can collect.

The bankruptcy filing has thrown a wrinkle into the state’s lawsuit. Last month, Villalobos persuaded a bankruptcy judge to unfreeze some of his assets so he could reopen one of his businesses. His lawyer Stephen Harris said Monday he’s considering trying to have the state’s suit transferred into the bankruptcy case.

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