CalPERS Board, Scandal-Ridden Fiduciary Counsel, Plan to Break California Law in Effort to Silence Board Member for Asking Too Many Questions, Seeking Records

The starkest proof of how CalPERS’ board is willing go to extreme, and in this case, illegal steps to defend staff rather than oversee it came in its Governance Committee meeting last month. We’ve chronicled how the board fell in line with recommendation by staff and its new, tainted fiduciary counsel, Robert Klausner, for fewer board meetings, even though CEO Anne Stausboll offered no factual support for of her assertion that her subordinates are overworked or that she has considered, much less exhausted, alternatives for streamlining the process or increasing staffing. Moreover, to the extent that board meeting take a lot of employee time, Stausboll’s stage management of the monthly board meetings via illegal private briefings is a major contributor.

In the next section of this board meeting, Klausner and most of the board participated in what one observer called a “hating on JJ Jelincic” session. Board member JJ Jelincic has engaged in what is an unpardonable sin: he asks too many questions at board meeting and occasionally requests documents from staff. If you’ve looked at board videos (as we have) the alleged “too many questions” are few in number save when staff obfuscates and Jelincic tries to get to the bottom of things.

This section of the Governance Committee meeting clearly shows that the board, aided and abetted by Klausner, is in the process of establishing a procedure for implementing trumped-up sanctions against Jelincic, presumably so as to facilitate an opponent unseating him in his next election. But Jelincic’s term isn’t up until 2018, so from their perspective they are stuck with an apostate in their ranks for an uncomfortably long amount of time. Part of their strategy appears to harass him into compliance with the posture the rest of the board, that of ceding authority to staff and conducting board meetings that are largely ceremonial. We strongly urge you to watch the pertinent portion in full, and have provide a link and annotations at the end of this post.*

And what are Jelincic’s supposed cardinal sins, aside from being too inquisitive? That of using the California Public Records Act (California’s version of FOIA) to request documents that staff refused to produce. Mind you, Jelincic has used the PRA all of three times, in #2029 on June 8, 2015, #2077 on July 14, 2015 and #2084 (a duplicate of #2077, so it is not really a separate request, as far as staff effort is concerned) on July 16, 2015. And these requests were for a small number of recent, readily accessible records. By contrast, virtually all of our Public Records Act requests have been far more difficult to fulfill, so it is hard to depict Jelincic’s modest submissions as burdensome.

And as to the other bone of contention, that Jelincic making these queries is an embarrassment to staff? Yes, as we’ll discuss in detail, staff ought to be embarrassed, since their refusal to provide information is rank insubordination and a further sign of an out-of-control organization that should trouble every CalPERS beneficiary. But if the board weren’t making a stink about Jelincic (almost certainly at the instigation of staff), it’s a virtual certainty that no one would have noticed, since the monthly PRA logs are read by hardly anyone, and certainly not reported on by the media.

So substantively, submitting a mere two Public Record Acts in response to staff intransigence has resulted in the board attacking Jelincic, when any properly-functioning board would be all over staff for their high-handedness in refusing a request for documents by a board member.

Every legal expert we’ve consulted in this matter has been appalled by the refusal of CalPERS’ staff to supply records to a board member when asked. For instance, we contacted two law professors, each at top law schools, both with considerable expertise in trustee matters. Each took a dim view of the notion that staff was trying to duck board member requests for information. As one said via e-mail:

In terms of overburdening the staff – the board, not the officers, are the boss, so the board members should be able to get whatever info they want or need to feel comfortable that they are discharging their duties appropriately.

And from the second:

My basic take is there is a fundamental problem when a board member can’t get relevant information out of the organization. Whether the board might have an expectation that individual directors won’t use publicly visible means to get information is a different question, but it only arises here because the director is being refused information in the first place.

As we will show, the board’s plan to stymie Jelincic’s use of the Public Records Act (“PRA”) to obtain information that staff has denied him is a clear-cut violation of statue, which explicitly states that government officials have the same right to use the PRA as members of the public. Similarly, the argument used by Klausner to try to deny Jelincic the ability to supervise staff, that board members must act as a body once a decision has been made, is also contrary to statute and deemed contrary to fiduciary duty by these experts in trustee matters.

In other words, to the extent that there is an issue here, it’s with CalPERS’ staff, not Jelincic. However, the board apparently would rather continue to fail to execute its duties rather than disturb its overly-cozy relationship with CalPERS’ officers.

The board ganging up against Jelincic comes straight out of The Peter Principle. One of its corollaries was “hierarchical exfoliation,” in which organizations expel both poor performers and notable outperformers, the latter because they make everyone else look bad. Jelincic, the lone board member willing to do his job, must be tarred and feathered for his crime of showing the rest of the board up.

As we’ll discuss in the balance of the post, the effort of the tainted counsel, Klausner, to depict Jelincic’s actions as contrary to his fiduciary duty are, in the words of one of the law professors, “ludicrous.” As another expert on public pensions put it, “CalPERS was really bottom fishing when it hired Klausner. And more generally, the board has been acting like amateurish small town public pension fund boards, and not like the CalPERS of the 1990s when it deserved its reputation for leadership.”

Top experts on California’s Public Records Act similarly dismissed Klausner’s attempts to deny Jelincic use of the Public Records Act (and remember, Klausner is not a member of the California bar and hence not qualified to opine on California law matters). In fact, it is perverse that Klausner sees fit to weigh in on California’s strong Public Records Act requirements, when the Jacksonville Police & Fire Pension Fund has twice lost costly court cases, in one instance undeniably due to actions taken directly by Klausner, to fight Florida Public Records Act requests. But that bad advice was highly profitable to him, since in one case, his firm has been estimated to earn in excess of $365,000 in fees, and it will earn more in mounting an economically indefensible appeal to the state supreme court on the issue of whether the plaintiff is entitled to recover his fees and costs, as stipulated by statute and as ruled by the appeals court (the cost of this appeal is conservatively estimated to exceed the amount of charges under dispute, and hence looks like pure and simple profiteering).

Finally, it is particularly unseemly that the board member who has been the most aggressive in pushing the illegal notion that CalPERS can and should sanction Jelincic over filing Public Records Act requests is Priya Mathur, who has been fined repeatedly for violating state ethics laws.

How CalPERS’ Board and Its Tainted Counsel Plan to Flout the Law to Silence a Diligent Board Member

The section of the CalPERS’ Governance Committee meeting where the board starts its attack on Jelincic begins at 48:25; we provide an annotated guide to this video at the end of the post.

Let’s start with the matter at issue, which is the right of government officials to obtain information under the California Records Act. The law is crystal clear on this matter: the idea that board members may not seek information that the public can obtain is expressly prohibited by statute.

As the California Public Records Act states, immediately after its section on definitions:

6252.5. Notwithstanding the definition of “member of the public” in Section 6252, an elected member or officer of any state or local agency is entitled to access to public records of that agency on the same basis as any other person. Nothing in this section shall limit the ability of elected members or officers to access public records permitted by law in the administration of their duties.

This section does not constitute a change in, but is declaratory of, existing law.

Understand the implication: the California legislature has enshrined in law the notion that government officials, at a bare minimum, have the right to have access information that members of the public as a whole do as a critical safeguard in the performance of their duties. Moreover, the final sentence makes clear that the legislature has considered, and rejects, the sort of arguments you’ll soon see advanced by members of the CalPERS board and its scandal-ridden attorney Robert Klausner to run roughshod over the law so as to leash and collar JJ Jelincic, the only board member who appears willing to supervise CalPERS’ staff.

You will also soon see how the board and Klausner attempt a run-around: they argue that board members are bound to follow decisions of the board, even when a majority of the board decides to take the barmy position of refusing to obtain more information from staff (remember, this board has been successfully conditioned by staff to see itself as burdensome, and therefore not entitled to ask staff, who are the board’s subordinates, to do their jobs, as in give the board the information it needs to execute its oversight duties). Here again, the position is contrary to statute.

It is a recognized principle under U.S. trust law that, regardless of whether a trustee supported (i.e., voted for) a decision of the board that results in a breach of fiduciary duty, that trustee can be held personally liable for that decision (i.e., jointly and severally liable) if he does not take steps to try to prevent or cure the breach. That risk similarly argues for the necessity of being able to obtain further information if the trustee is concerned about a possible breach and needs to investigate further to determine if action is warranted. Clearly, getting records from CalPERS is a reasonable step to take in that context.

Here is a discussion of relevant law:

Subsection (b) is based on Restatement (Second) of Trusts Section 258 (1959). Cotrustees are jointly and severally liable for a breach of trust if there was joint participation in the breach. Joint and several liability also is imposed on a nonparticipating cotrustee who, as provided in Section 703(g), failed to exercise reasonable care (1) to prevent a cotrustee from committing a serious breach of trust, or (2) to compel a cotrustee to redress a serious breach of trust. Joint and several liability normally carries with it a right in any trustee to seek contribution from a cotrustee to the extent the trustee has paid more than the trustee’s proportionate share of the liability. Subsection (b), consistent with Restatement (Second) of Trusts Section 258 (1959), creates an exception. A trustee who was substantially more at fault or committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries is not entitled to contribution from the other trustees.

A board member of an apparently better functioning board indicated that this information is consistent with his memory of the issue from the fiduciary training he received, that board members are liable for breaches of fiduciary duty of their fellow board members if they failed to take steps to try to remedy the breach. That includes opposing board decisions they believe to be a breach of fiduciary duty. It is thus contrary to law to demand that board members all go lemming-like over the cliff together when they are concerned that their fellow board members are engaged in a breach of trust.

Yet we’ll see board and the tainted lawyer Klaunser pump for fealty over the proper execution of fiduciary duty, while trying to wrap it in the fiduciary flag.

Board member Priya Mathur made this sort of argument in the Governance Committee meeting of September 17, 2015:

Board Member Priya Mathur: We also talked about um, prohibiting, that, that, prohibiting the circumventing of this control around this information flow between staff and the board, that if staff or the board president, the president of the committee, of the board as a whole, the committee chair, the committee as a whole, says, “This is the kind of information we are going to get, we are not going to get this additional,” even if it’s been requested by one board member, that there not be any way to circumvent that, that you’re not allowed to do a PRA request or ask for it from a lower staff member or whatever methods might be employed, so have that be a strong statement, um, around that. I think those were some of the keys. Did I miss anything?

What is significant about this exchange isn’t merely that the board member with the worst record of legal compliance is pumping hard for authoritarian controls around information, as if having board members be limited to the same base of knowledge would be a plus. It’s also that Mathur explicitly advocates the patently illegal measure of barring board member use of PRAs to obtain information, just as anyone outside CalPERS could.

What is particularly troubling is that this idea also appears to have been cooked up by, or at least encouraged, by staff. Mathur sits between the General Counsel, Matthew Jacobs, and the Deputy Executive Officer, Customer Services and Support, Donna Lum. She turns first to Jacobs for further correction and input into what she just said, then to Lum. Bear in mind that Jacobs joined CalPERS only recently, and his previous experience has been entirely as a litigator. That is a dangerously narrow base of experience. He’s never worked in a fiduciary, nor has he worked in an executive level role in either a large organization or a governmental body. There’s thus good reason to be concerned that he does not know what he does not know, and as a result, that his reflexes will be poor. We seem to be seeing this in spades in his posture here, in his allowing CalPERS to violate the Bagley-Keene Open Meeting Act via having routinized, pre-board meeting private briefings, as we discussed in an earlier post, and additional Bagely-Keene violations that took place during this workshop, which we will discuss in detail later in this series.

And if you know the history of the board, while JJ Jelincic is not named, he is clearly the lone target of this proposal. Jelnicic is the only board member to have used the PRA, in large measure because he is the only board member inquisitive enough to ask meaningful questions, something that staff and the board seem to regard as a near-existential threat. That alone is enough to raise red flags about governance at CalPERS. Moreover, Jelinicc is suspected of having an information advantage by having been a staff member and union steward at CalPERS**, and thus having an informal network at CalPERS, something none of the other board members have. It’s thus not hard to imagine that Jelincic’s one-time colleagues call him up with gossip and grievances.

Thus the board and senior staff also seems desperate to prevent Jelnicic from having an information advantage, when having an advanced warning system, even if it was noisy and generated some false positives, would be a plus if you were concerned about doing a robust job of oversight, but a negative if you misconstrued your role as blindly protecting CalPERS’ senior officers.

Here is a stronger-form version of the same point of view from Investment Committee Chairman Henry Jones in the November Governance Committee meeting:

Board Member Henry Jones: Two, I think that as you – as was indicated, if we make a decision as a body, I think if someone violates that decision, there needs to be some kind of consequence, because right now there’s no consequence.

If an individual, and I’m speaking specific about the Public Records Act request, you know. That if
we had already made a decision, then you shouldn’t use another process to go around that decision to get what you want and then use it in a way that may not be as beneficial to the institution as a whole. So those are a couple right off the bat that I think we need to, if it happens, we need to have some kind of a policy that where there are some strong consequences to avoid that kind of thing from happening.

Let’s be clear: there is no basis for sanctioning a government official for exercising his clear statutory right to obtain information that members of the great unwashed public can access. Jones is basically telling CalPERS to buy litigation futures.

And if you read or listen carefully, Jones’ basis for demonizing the use of the PRA is that a board member might “use it in a way that may not be as beneficial to the institution as a whole.” So Jones is seriously arguing that it is preferable that the board remain ignorant about actual or potential negative How can that be even remotely consistent with proper oversight and executing the board’s fiduciary duty? And if the board member might actually uncover some dirt, isn’t it better for someone like a board member, who has a duty of loyalty and care to CalPERS, to get it first, rather than a journalist?

But since Robert Klaunser has profited handsomely from indulging, or perhaps even encouraging, the Jacksonville Fire & Police Pension Fund in violating Florida’s less public-friendly Public Records Act, one should not be surprised that he falls in line with the desire of board members who are not attorneys to act as if CalPERS is above the law. After a long-winded lead in, here is Klausner’s bottonm line:

Robert Klausner: But to then say because I’m not getting somethin’, that’s another one of those things, where if a member feels they’re being denied information, you need to take it up with the president or you need to take it up with the director or you need to take it up at a meeting as an agenda item and say, as a trustee, I should be provided with X, and I’m not gettin’ X. And how can we improve my ability as a trustee to get information that I need to do that.

To go through the Public Records Act or ask somebody else to do it, I think it undermines again the
effectiveness of the mission of the Board as a whole, and I don’t think that’s consistent with good fiduciary practice.

We see Klausner later doubling down on his position:

Klausner: Even though the exercise of the request is legal,it may be a deviation from good fiduciary practice or the standard of care, accepted by a fiduciary. Nobody makes any one of you be a trust…well, some of you have to by ex officio, but, you know, for the most part, trustees on the system, um, agreed to serve whether they were asked or whether they stood for election, because they wanted to, whatever brings you to the board.

Once you’re here, your constituency is irrelevant and you act as a collegial body. And when you deviate
from that group concept that you do not make decisions individually, then you undermine your mission as a whole. So the answer is it legal to ask for anything? Yeah, I think it is statutorily. Is, in every context is it good fiduciary practice if the system has decided otherwise, the answer’s no.

As we stressed, we have yet to find a single attorney who endorses Klausner’s position, and we’ve consulted top experts. Moreover, the two attorneys on the board, Dana Hollinger and Richard Costigan, seemed disturbed by Klausner’s assertions and took issue with them, but were outgunned by the “out to get Jelincic” faction.

And make no mistake, these remarks are clearly an attack on Jelincic. Klausner’s immediately preceding remark singled him out (listen here at 57:02) without naming him by referring to a board member who was restricted in what he could do by virtue of having two attorney general opinions against him. Others who listened to this section remarked, unprompted, that this comment, as well as Klausner’s baseless insinuation that Jelincic was submitting Public Records Acts requests through others, were not-subtle efforts to denigrate Jelincic. And Klaunser also conveniently airbrushes out of his story that Jelincic has been blocked in his efforts to get certain items on the agenda of the Investment Committee by Henry Jones, its chairman.

The notion of the board being obligated to operate as a unit is utter fabrication. As one of the law professors who is also an authority on trust matters wrote:

The board members have duties as individuals, and knowingly failing to act when another co-trustee is committing a breach of trust is itself a breach of fiduciary duty. In the starkest terms, imagine that one trustee learned that another trustee was embezzling funds and did nothing. That’s the principle here.

He also took issue with another theme of this session, that having board members criticize the organization or individuals in it was a no-no and should subject them to sanctions. This is utterly barmy given CalPERS’ fresh history of having a CEO that was indicted and is now in prison. As the same law professor said:

I can understand a concern about a fiduciary disparaging an organization, but it certainly doesn’t raise fiduciary duty problems. In some situations, criticism would be consistent with fiduciary duty.

nd when dealing with a pension plan, the real concern is the long-term health of the plan, not short-term market value, and protecting that long-term health might require criticisms to reform the plan.

Mind you, I had not alerted him to the fact that one of the big sources of tension between Jelicic, the staff, and the rest of the board was Jelincic questioning staff’s fealty to private equity, which gets to the heart of the question of the long-term health of the plan. In other words, the sort of questions that Jelincic is raising go straight to the heart of what a fiduciary of a pension plan should have as his first and foremost concern, yet the staff, virtually all of the board, and their new henchman Klaunser seem determined to work against Jelincic operating as as responsible fiduciary.

Similarly, this is reaction of Peter Scheer, the head of California’s First Amendment Coalition, which has long been one of the most trusted advisors to the legislature on Public Records Act matters:

It strikes me as ironic to hear CALPERS board members invoke their fiduciary duty as a justification for policies that would make the organization even less transparent than it is.

The mission of the CALPERS’ board is not merely to set broad policy and manage the top executives. Even more importantly, its mission is to provide effective oversight. CALPERS’s recent history, after all, includes criminal prosecutions of key employees at the highest levels. If that isn’t a situation that cries out for rigorous oversight and greater transparency, what is?

The use of the CPRA by a member of a public agency’s legislative body is unusual, but not unheard of. When certain board members are unable to obtain records and information that they request from staff, use of the CPRA is their only recourse. Unless the requested records are subject to a legal exemption from disclosure, they should be released – they are, by definition, records that the public is entitled to see.

How disclosing information that belongs to the public can be contrary board members’ fiduciary duty is beyond me. Compliance with the CPRA, and enhancing CALPERS’ transparency – these are completely consistent with the board’s fiduciary duty.

And from Karl Olson, arguably the state’s top attorney on Public Records Act matters, and who among other things, has twice sued CalPERS and to make disclosures under the PRA (in one case, he won, in the other, he got a landmark settlement in which CalPERs agreed to publish private equity return data):

In my view Mr. Klausner’s view of fiduciary duty is warped, and the notion that a board member should not be able to make perfectly legal Public Records Act because of some ill-defined “fiduciary duty” to go along with the rest of the board and “drink the Kool-Aid” with the rest of the Board is a prescription for disaster and a prescription for plundering taxpayers and retireees.

We have seen, both in California and nationwide, that billionaire hedge fund executives have suckered gullible public pension funds into investing billions of dollars which did nothing for returns but gave billions of dollars to the hedge fund operators who are politically well connected and give lots of money to politicians. CalPERS itself belatedly recognized that hedge funds were not a good idea.

It is only through Public Records Act requests that the public, and board members who take their fiduciary duties to the public seriously, can see whether the managers of the nation’s largest public pension funds are doing their job, and can guard against future pay-to-play scandals. The notion that a board member shouldn’t make Public Records Act requests seems to me a dangerous attempt to squelch dissent and to circle the wagons whenever someone questions the investment of public money. Squelching dissent like this seems more consistent with Vladimir Putin’s Russia than with a country that celebrates the right to criticize, and it is not consistent with the Public Records Act’s preamble that “access to information concerning the conduct of the people’s business is a fundamental and necessary right of every person in this state.”

Klausner’s behavior here is consistent with media accounts of his propensity to issue opinions that pension boards wanted to hear, when other attorneys, both before and after Klausner’s tenure, disagreed sharply with his views. We’ve unearthed more evidence of this pattern in 1999 memo that Klausner issued to the board of the Jacksonville Police & Fire Pension Fund to create a secret Senior Staff pension fund. Multiple experts that have read the city’s case arguing that the fund is illegal, meaning Klausner’s 1999 memo was tantamount to a cover for the board to break the law, agree that the city’s arguments are well founded. How does it serve CalPERS to have an attorney in one of its most sensitive role with a history of giving regularly contested advice serve them? Keep in mind that officials in San Diego dealt with Klausner said:

He’s the guy from Florida that mostly supported the questionable issues without citing much case law…”The California law firms that gave opinions the board didn’t want to hear were fired. This guy would give all kinds of opinions that certain members of the board and staff wanted him to give.

When Klaunser was interviewed by the board before he was chosen to be fiduciary counsel, he finessed the problem of his lack of a California bar license by arguing that he was giving policy advice, not legal advice. Yet the role of fiduciary counsel inherently involves offering defensible, and preferable conservative, legal guidance so as to help the board avoid taking on unnecessary liability.

Yet we see Klausner cavalierly opining on California’s PRA, a topic on which he is unqualified to comment, and offering interpretations about how boards should operate that are rejected roundly by recognized legal experts, apparently to grease the wheels for the board and staff to stymnie proper supervision of the institution.

Klausner effectively admitted to the board that he lacked the expertise needed for the role of CalPERS’ fiduciary counsel. The caliber of his advice confirms that he is a danger to CalPERS and ultimately, to CalPERS beneficiaries and California taxpayers.

I hope readers will circulate this post widely, along with our companion pieces about how CalPERS is systematically violating open meeting laws to conduct its business out of public view, and how Robert Klausner has as decades-long history of dubious conduct and is deeply involved in a pension fund dispute in Jacksonville and is currently ducking a subpoeana, apparently to escape turning over incriminating records and answer questions under oath.

Be sure to include friends and colleagues in California, as well as posting this post on Facebook and other social media.

I strongly urge readers to voice their concerns to the state Treasurer and Controller, both of whom sit on CalPERS’ board and are therefore share in the responsibility for this disastrous appointment. Tell them the only course of action is to find a replacement for Klausner. Their contact details:

Mr. John Chiang
California State Treasurer
Post Office Box 942809
Sacramento, CA 94209-0001
(916) 653-2995

Ms. Betty Yee
California State Controller
P.O. Box 942850
Sacramento, California 94250-5872
(916) 445-2636

In addition, if you are a California citizen, please alert your state Assemblyman and Senator, and demand that they look into this serious lapse of governance. You can find you Senate and Assembly representatives here.

Please also contact your local newspaper and television station, as well as the Sacramento Bee. Tell them you think this story is important for all California taxpayers and urge them to take it up. You can find the form for sending a letter to the editor here.

Thanks again for your interest and help.


* You will see that our need to keep this post to a reasonable length and stay focused on the legal arguments has forced us to omit some of the absurd arguments made in support of the effort to deny Jelincic answers to his queries. You’ll notice that no one even attempted to say that the substance of his requests were unreasonable or burdensome. Instead, the some board members created wild-eyed hypothetical scenarios that a board member might overwhelm staff with information requests.

CalPERS Governance Committee meeting video

31:00- Bob Klausner (outside fiduciary counsel) asrgues that board should meet less

48:25- start of discussion on board behavior

50:00- Klausner argues that it is inconsistent with fiduciary duty of board members to CalPERS

51:50- Klausner makes explicit statement that criticizing CalPERS is contrary to fiduciary duty

53:20- start of PRA discussion

56:15- Klausner, “Everybody who’s got a blog or whatever…”

56:48- PRA scenario specifically

58:35- Klausner, “Legally, the individual has the right to ask for the information.”

1:08:50- Klausner opines negatively on JJ’s PRA

1:18:20- start of criticism of JJ asking too many questions

** Technically Jelincic is still an employee, but he has for practical purposes been relieved of his staff role and works full time on the board.

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  1. Will

    Sounds like South Carolina’s main pension fund, SCRS; a few years ago 5 members voted to censure the one decent-seeming dude trying to ensure some amount of honesty. Here’s a news article about it with the motion of censure and the victim board member’s response:

    I’ve read about a lot of corruption, but I still shake my head imagining 5 board members censuring 1 person for asking honest questions. It’s so incredibly public and obvious to anyone paying attention!

  2. Assolonius

    What do you expect when the foxes get to guard the henhouse

    Stausball and eliopolus have focused their energy on ways to get Jelincic, how very sad and im sure its distracted those two investment professionals from “formulating and implementing investing strategies”……

    Hypocrites that preach transparency, accountability and stewardship want none of that in their castle, how nice. And while we’re talking about consequences Henry Jones, will Ann Stausball be held accountable for her past transgressions or are we overlooking those too?

    1. dk

      Well at least now we know what Stausball and “senior leadership” are doing “50, 60, 70 percent” of the time.


  3. Jim A

    CALPERS doesn’t strike me so much as a naif. The remind me of the various layers of the mortgage pipeline during the RE bubble which were all “These are the lies that I need to hear.” Because “He says that he make 150k as a shift manager at McDonalds,” rhymes with “Alternative investments will give us 8% returns.” It all works until it stops working, and then it stops working very abruptly.

  4. laura

    Bear in mind that JJ is a lowly state worker. His concerns about the health of the fund are directly related to the issue of a secure retirement. His obligation is to the current and future retirees and not the very important people, and his status among the very important people. He’s pointed out that some very important people are ripping off the current and future retirees, and he’s done it publicly, not in the quiet rooms, and that’s just not done.

    If the fund plunderers prevail, and losses or failure to achieve the assumed rate of return are described as a burden on the taxpayer it’s more “evidence” of the so-called unsustainable benefit and must be replaced by the defined contribution 401k as constantly promulgated by hedge funder John Arnold of Enron fame who’s currently circulating a constitutional amendment for the 2016 ballot.

    Yves, do you or your readers see any possible coordination between efforts to silence JJ and those who seek to rid public employee’s of a means for modest retirement security, or is that outcome merely a happy coincidence? Is correlation causation?

  5. Cafefilos

    It’s fascinating to watch how the Oligarchy works in detail. It’s fun watch what happens when we shine a light on them.

    I’m sure these types of tactics are used in many other situation. Thanks Yves for bringing the light and showing us how it’s done.

  6. tegnost

    Rather than meandering around in a thought balloon today I’ll keep it simple. Thanks yves for exposing the dirty underbelly of “fealty” to an institution, and thanks jj jelencic for engaging in due diligence. I hope he feels some support from this quarter. It seems like a case of it taking a lot of effort to maintain a lie, and while there’s generally no reward for doing the right thing, at least it doesn’t require any management or energy to maintain a facade.

  7. flora

    Plausible deniability is a legal defense of sorts. How dare any board member ask potentially more than embarrassing questions.

    If the CalPERS board or staff face any lawsuits or legal inquires over their fiduciary failures you can bet they’ll blame it all on JJ Jelencic and say he caused any problems. Has the FBI closed its CalPERS investigation? Kudos to Mr. Jelencic for his work to give real fiduciary oversight to the staff. CalPERS needs more board members that share his integrity.

    Great reporting. Thank you.

  8. Sluggeaux

    Fantastic reporting! The best yet.

    This post is a window on how the kleptocracy subverts transparency and public oversight in order to convert the meager assets of working people into the hollow transitory material pleasures of vacation homes, private jets, luxury cars, and rounds of golf that they delude themselves can substitute for having a human soul.

    When a recent former CalPERS Board member and CEO has admitted in a criminal plea deal his corruption by taking cash kick-backs from a Private Equity placement agent, and that placement, also a former CalPERS Board member blew his brains out after a Grand bouffe at a Reno Nevada casino earlier this very year, Mr. Klausner’s advice to violate the law and reduce transparency makes one wonder what else is being covered-up.

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