Why won’t Apollo explain?

Why did Apollo Global Management continue to pay placement agent Al Villalobos millions of dollars in fees to raise capital from the California Public Employees’ Retirement System, when two CalPERS investment officials had apparently told the firm that it didn’t need to go through third parties to solicit commitments from the system?

It’s a question that’s always puzzled me. And it’s become even more puzzling now, in the wake of the US Department of Justice’s announcement in March that it was indicting former CalPERS board member Villalobos and former CalPERS chief executive Federico Buenrostro. The pair stand accused of allegedly forging disclosure letters that Villalobos’ firm ARVCO needed to get paid for helping Apollo raise capital from the system.

Maybe there’s a simple and straightforward answer that would resolve the issue. But Apollo, as is its wont, has always declined to answer any questions on the topic – other than to say it was unaware of any “misconduct” by Villalobos.


The issue first emerged in 2010, when two formerly high-ranking CalPERS private equity officials were deposed as part of Villalobos’s bankruptcy proceedings.

In his deposition, Leon Shahinian, CalPERS’ former head of private equity, insisted that CalPERS was happy for Apollo to approach the retirement system directly, and had told the Leon Black-led firm as much back in 2006. “Part of the reason why I told Leon Black that CalPERS wanted a direct relationship with Apollo was that I did not see a need for there to be a third party involved,” Shahinian said.

Shortly after that 2006 conversation, Shahinian said he talked to Black about the possibility of investing money in a distressed debt fund. “And after I had that initial conversation with Leon Black expressing CalPERS’ interest to invest in a fund like that, I learned that Apollo hired ARVCO to be the placement agent,” Shahinian said. “I guess I didn’t understand why Apollo felt like they needed to hire a placement agent on something where CalPERS had explicitly indicated an interest in investing in.”

Similarly, Joncarlo Mark, a former senior portfolio manager with CalPERS, expressed his concern about Villalobos’ involvement in shopping an Apollo fund to the pension in 2005, according to his deposition. “Apollo was an existing manager with CalPERS … [I] felt it was unnecessary to have Villalobos involved in representing them when we had an existing very large-scale relationship with Apollo,” he said.

Neither Mark nor Shahinian responded to requests for comment for this article.

So what gives? Why did Apollo feel the need to hire ARVCO to solicit these investment officials even after they had already been assured that the system was all ears?

The firm declined to answer the question specifically, sending me this statement instead: “Apollo has always


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