By Dale Kasler
Business & Real Estate
April 12, 2016 3:29 PM
- Bankruptcy judge says estate of Alfred Villalobos lacks money to pay money owed state
- Villalobos commited suicide in January 2015
- Villalobos’ fortune overstated
The late Alfred Villalobos, the central figure in the CalPERS bribery case, always insisted he did nothing wrong and he didn’t owe the state of California a dime.
Now it appears Villalobos and his defunct company won’t be paying the state anything to settle civil fraud claims filed six years ago, officials connected with the case said Tuesday.
Even as a federal bankruptcy judge Tuesday approved the state’s $20 million settlement with Villalobos’ defunct company, it was clear that the Villalobos bankruptcy estate doesn’t have nearly enough money to make good on the state’s claim.
Alan Smith, attorney for the bankruptcy trustee overseeing Villalobos’ assets, said other claims hold a higher priority in the bankruptcy pecking order, including millions of dollars in lawyers’ fees and a federal income tax bill that could be around $2.5 million. Legal fees, tax debts and claims held by creditors with security, or collateral, get paid ahead of unsecured claims such as the state’s.
Smith added that it didn’t help that Villalobos’ fortune, which Villalobos once estimated at $62 million, wound up being worth considerably less.
“The value was probably overstated,” Smith said in an interview after the brief hearing in U.S. Bankruptcy Court.
Former Attorney General Jerry Brown sued Villalobos, his company and former CalPERS Chief Executive Fred Buenrostro in Los Angeles Superior Court in 2010, claiming they defrauded the state by scheming to steer pension investments to Villalobos’ clients.
Buenrostro settled his portion of the lawsuit in February by agreeing to forfeit $250,000 in five yearly installments, set to begin after he completes his prison term. Buenrostro pleaded guilty to criminal charges of taking bribes from Villalobos and is expected to receive up to five years in prison when he is sentenced May 18 in U.S. District Court in San Francisco.
Villalobos shot himself to death at a Reno gun range in January 2015, shortly before he was scheduled to stand trial in the criminal case.
Brown’s successor, Attorney General Kamala Harris, continued to pursue the civil lawsuit even though Villalobos was dead and his company, Arvco Capital Research, went out of business years earlier. The $20 million settlement was disclosed in court papers a month ago.
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