PCG's Bower claims defamation from CalPERS probe(2)

The law firm hired by CalPERS to investigate alleged pay-to-play activities is now being sued by PCG founder Chris Bower for having allegedly ‘impugned’ the reputation of PCG and Bower.

Christopher Bower, founder of private equity consultancy Pacific Corporate Group, has claimed he was defamed by law firm Steptoe & Johnson during an investigation of alleged pay-to-play practices at the California Public Employees’ Retirement System.

Bower has sued Steptoe & Johnson, Steptoe attorney Philip Khinda, who led the investigation team, and Navigant Consulting for what he describes as the defendants improperly using the CalPERS’ investigation to “unfairly impugn the reputation of [PCG], without any reasonable basis for doing so and knowing that their statements would be publicly disseminated”, according to the lawsuit, which was filed Monday in the Superior Court of California, County of Los Angeles.

And Bower is tackling the case on his own. He filed the lawsuit “pro se”, meaning he is not represented by an attorney. Bower could not be reached for comment Thursday.

California law is clear — you cannot squelch free speech on issues in the public interest with retaliatory lawsuits.

Steptoe & Johnson

“Among other deficiencies, the claims in Mr. Bower’s filing are baseless. We anticipate a rapid and successful dismissal of this lawsuit, including the recovery of our attorney’s fees and costs,” Steptoe said in a statement emailed Thursday evening. “California law is clear – you cannot squelch free speech on issues in the public interest with retaliatory lawsuits.”

Steptoe completed an 18-month investigation and published its finding in 2011 into alleged pay-to-play practices by investment managers and others trying to win commitments from CalPERS. The report included a small section about PCG and Bower, concluding the firm had “strayed” from acting in the best interests of the system.

Bower may have been prevented from acting in CalPERS’ best interest, according to Steptoe’s report, because of his alleged connections to embattled placement agent Alfred Villalobos. Villalobos was a former CalPERS board member being sued by the California attorney general’s office for alleged fraud in relation to his work with CalPERS. Specifically, the report said Bower allegedly did not disclose that PCG had hired a Villalobos firm, Capital Formation Partners, to pursue a strategic partnership between PCG and CalPERS in 2006.

Also, a former PCG employee “suggested that Bower and his firm would not oppose investments in funds for which Villalobos was hired as a placement agent – a troubling claim that we could not confirm based on available information and Bower’s unavailability to us”, the report said. 

CalPERS ended its decades-old relationship with PCG in 2010 after a strategic review of its portfolio and the firm fractured into pieces, with its international division spinning off and its asset management arm eventually turning into an independent firm. It's unclear if PCG is still operating in any capacity; the firm's web site does not appear to exist any longer.


Bower’s lawsuit did not specify damages, but alleged defamation and interference with existing contractual relationship. He claimed Steptoe and the other defendants used the CalPERS investigation to “unfairly leverage settlements, disgorge fees and reduce fees to their financial benefit”, according to the documents.

To further the alleged scheme, Steptoe and the defendants used Bower and PCG “as a pawn in these negotiations by threatening, without basis, that [Bower and PCG] were going to be investigated and indicted without any reasonable basis for believing that to be true. Defendants did so to leverage settlements from others where there was not a contractual basis for doing so”, according to the lawsuit.

CalPERS, in an emailed statement Thursday, supported the job Steptoe did and said its investigation led to important reforms. “As a result of the special review, and under the leadership of CalPERS’ current board of administration and executive leadership, many significant reforms have been implemented to make CalPERS a more transparent, accountable and sound pension system.”