Former California Public Employees' Retirement System (CalPERS) CEO Federico Buenrostro was sentenced Tuesday by a federal judge to four and a half years in prison for accepting more than $200,000 in bribes trying to steer investments.

Buenrostro pleaded guilty to fraud and bribery charges two years ago, saying he started taking bribes around 2005 to try and get CalPERS staff members to make investment decisions that helped Alfred Villalobos, an investment manager and former board member of the fund. The judge called the case "seriously troubling", and said it reflected a "spectacular breach of trust for the most venal of purposes, which is self-enrichment."

From the Los Angeles Times

A federal judge Tuesday sentenced the former head of the California Public Employees' Retirement System to 4 1/2 years in prison after the former chief executive acknowledged accepting more than $200,000 in bribes and trying to steer investments to help an associate. Senior U.S. District Judge Charles Breyer called the case against Federico Buenrostro Jr., head of the nation's largest public pension fund, “seriously troubling” and said it reflected a “spectacular breach of trust for the most venal of purposes, which is self-enrichment.” Buenrostro pleaded guilty to fraud and bribery charges two years ago, saying he started taking bribes around 2005 to try to get CalPERS staff members to make investment decisions that helped Alfred Villalobos, an investment manager and former board member of the pension fund. Buenrostro said he accepted cash and a trip around the world and allowed Villalobos to pay for his wedding in Lake Tahoe. Villalobos killed himself last year, weeks before he was set to go on trial. He had pleaded not guilty to fraud charges. “I take full responsibility and accept the consequences of the actions I took,” Buenrostro, in a blue jail outfit and leg irons, told the judge before he was sentenced. “I'm humiliated, embarrassed and deeply ashamed of my actions.”

The sentencing is the result of a years-long investigation into money management middlemen who helped clients win investment business from the fund which as about $290 billion in assets. Buenrostro faced up to five years in prison but the US attorney's office asked for a four year term, citing Buenrostro's cooperation. As part of a plea deal, Buenrostro acknowledged giving Villalobos access to confidential investment information and forging letters that enabled firms connected with Villalobos to collect a $14 million commission on $3 billion worth of pension fund investments. The former CEO has also agreed to pay back $250,000 to the state.

"This was one of the most startling and serious cases of public corruption in the history of the state of California. That being said, Mr. Buenrostro did come forward and admit to what he had done." said Tim Lucey, representing the US attorney's office.

As far as Villalobos, after pleading not guilty to fraud, he took his own life just weeks before he was set to go on trial.

Sadly, this isn't something that members of CalPERS needed to experience. With the fund already severely underfunded as it is, learning that the CEO was crooked and diverted funds to investment managers due to bribes instead of performance and strategy is just kicking the members while they are down.

Funding ratio estimates for CalPERS