Board Member JJ Jelincic Calls Out CalPERS’ “Roy Cohn,” General Counsel Matt Jacobs

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CalPERS’ “most effective director” JJ Jelincic may be leaving at the end of the year, but he is not going quietly.

Jelicic criticized the star chamber that recently sanctioned him in his most forceful terms to date. From the Board of Administration meeting last Wednesday, starting at 4:08:

Board Member JJ Jelincic: Joseph McCarthy had his Roy Cohn and his secret list of commies in the State Department.

Bill Slaton has Matt Jacobs and his list of secret charges.

I have my own secret file and I’m going to share some of it with you today.

When Jon Ortiz left the Sacramento Bee, it was a great loss to the paper. Here, I have a reprint of his article from December 28, 2013 entitled “Securities and Exchange Commission looking into CalPERS stock purchases”.

What’s really amazing about this story is Misters Slaton, Jacobs and Feckner all believe it was based on my March 14, 2016 comments during an open Investment Committee. Who knew Jon was a time traveler?

How did these gentlemen figure it out?

Why do I believe they think that? I can’t tell you. The belief is based on a super-secret document. If I told you, I would undoubtedly be sent to yet another training.

On the other hand, Bill Slaton could actually come up with charges. If he did so and would make those charges public, just like he did his demand for my resignation, I would have the ability to offer a public defense.

I think it is called transparency.

For those of you who may not recall the genisis this sorry episode, Bill Black, who in addition to being a white collar criminologist and law professor has also been the general counsel of a large financial institution, recapped key details in an earlier post:

First, while Slaton provided zero evidence of any wrongdoing by Jelincic, he demanded that that the board act “as soon as possible” to consider Slaton’s demand that the removal of Jelincic from the board…

As a general counsel, I would have responded immediately to Slaton at the board meeting. First, I would have emphasized that Slaton had presented nothing to warrant the board considering such a drastic sanction against another director. Second, I would have stressed that Jelincic’s request that Slaton notify Jelincic’s of the specific charges was an absolute necessity before the board should even consider holding a meeting to sanction a director. Third, I would have called attention to Slaton’s refusal to provide any facts supporting his conclusory claims of misconduct when Jelincic requested that he do so. The fourth point I would have made is described below…

Matt Jacobs, the General Counsel did speak up, but solely to implicitly support throwing Jelincic under the bus. His statement ignored the three points I would have made…Jacobs failed to note that the board did not have the power under the powers he had just read, to impose Slaton’s proposed sanction. That is the fourth point I would have made to the board.

The transcript then records Feckner’s response to his General Counsel’s legalese…. He told the board that “Matt and I have had many discussions about” Slaton’s desire to sanction Jelincic…

Feckner’s revelation proves that Slaton had zero excuse for not providing Jelincic with the specific charges so that he could respond and refute any pretext for the board holding a “trial.”

Jelincic was repeatedly promised that his disciplinary hearing would be held in public. CalPERS engaged in a bait and switch. To his credit, even though Jelincic’s persecutor Bill Slaton proposed a star chamber, board president Robert Feckner initially agreed Jelincic’s request for a public process. Feckner also pointed out that since the claim was that Jelincic had engaged in leaks, that there would be no harm in discussing the allegations, since the matters at hand would be public. 1

Feckner reaffirmed that commitment after the mid-January board meeting, on January 23, as you can see from the first document embedded at the end of this post. Feckner’s retreat from transparency and fair dealing started on February 10, as shown in the second embedded document. This was the sole content of an e-mail to Jelnicic, with a cc to Feckner’s assistant Karen Perkins. The commitment to putting the matter on the agenda and having the Board render judgment has been abandoned; now we have a private process, with the initial meeting supposedly for Slaton to present his charges, and Jelincic to have an opportunity to respond, specifically:

But whether or not you say anything at the meeting, my thought is that you’ll have two weeks to get back to me, at which time we’ll meet again and you can say whatever you’d like and present whatever documents you’d like. After that, I’ll determine whether any action is necessary.

I assure you that you and Bill will have ample opportunity to present information and respond before any decision will be made.

The next day, Jelincic sent a notice of adverse interests to CalPERS’ general counsel, Matt Jacobs. For non-lawyers, this was a legal notification to CalPERS that its position was opposed to Jelnicic and that CalPERS’ lawyers therefore could not represent him. Jelincic’s status as an adverse party also implies that any documents or communication to him or his legal representative with respect to this disciplinary matter would not be subject to attorney-client privilege. There is precedent for board members being adverse to CalPERS, the highest profile example occurring in 2001, when state controller Kathleen Connell sued CalPERS.

CalPERS did agree to let Jelincic engage his own lawyer, Karl Olson, at CalPERS’ expense. CalPERS brought in its fiduciary counsel Ashley Dunning to handle what was presented as an initial discussion, which took place in early April. In setting up the meeting, Dunning stated that there were no charges or even potential charges against Jelincic, merely complaints by Slaton. Karl Olson told me that Dunning insisted the meeting was attorney-client privileged, a position he disagrees with and every attorney to which I have spoken regards as absurd in light of Jelincic having sent a notice of adverse interests. For instance, from a former California prosecutor via e-mail:

There can be no claim of attorney-client privilege. JJ was an adverse party — the privilege goes poof. There can be no authority for her ludicrous position. You provide a document to an adverse party without a prior NDA [non-disclosure agreement], privilege waived as to the entire world, game/set/match.

Despite Feckner setting out clearly, in writing, that Jelincic would be offered time and an opportunity to respond to charges before he made his decision, the only substantive discussion was the early April videoconference call. So not only was the entire proceeding a star chamber but to make matters even worse, only one side was given the opportunity to present its case. Jelincic had stated and Feckner had agreed that Jelincic would need time to organize information and present an effective rebuttal to Slaton, who had had months to develop his information and refine his case with Matt Jacobs.

The CalPERS side had indeed been ginning up this show trial for some time. As we noted in January:

While most of the board members seemed uncomfortable proceeding with a formal matter against Jelincic, none had the courage to challenge Slaton. If you watch carefully, you will see that the ones who are keen to punish Jelincic are Slaton, board president Rob Feckner, and Priya Mathur. Feckner says he has had “many conversations” with the general counsel on this matter (and please read law professor and former general counsel Bill Black’s assessment that Jacob’s role is partisan and the advice he is giving is not just wrongheaded but actually destructive to CalPERS). See the third document at the end of the post for yet another example of Slaton engaging in trumped-up charges against Jelincic. A member of the state attorney general’s office just last week confirmed Jelincic’s view that sending informational material to the rest of the board does not constitute a serial meeting.

How did Feckner respond to Jelincic throwing down a rhetorical gauntlet?

Feckner ignored Jelincic. Over two hours later, at the end of the meeting, Feckner made a statement that he had already prepared, in response to to board candidate Michael Flaherman’s public comment the moth prior. From the April Board of Administration meeting, starting at 43:45:

Michael Flaherman, Visiting Scholar, UC Berkeley: Good morning. I’m Michael Flaherman. I’m a retiree of CalPERS. I’m also a visiting scholar at UC Berkeley.

The reason I wanted to address you this morning is that I see that you’re about to have a briefing on cybersecurity, and I want to call your attention to an alert that was put out by a major law firm Kirkland & Ellis, which advises probably a third of the private equity managers you do business with. And I’m just going read just a couple of sentences. The title of this portion is called “Drawdown Scam”.

“Kirkland has recently been made aware of cyber criminals targeting private equity sponsors and their drawdown practices.” That’s calling capital from you. “In these attacks, the prevalence of which is unclear, cyber criminals have hacked into sponsors systems” – sponsors meaning private equity firm – “and obtained drawdown notices and LP information. The criminals then used fake drawdown requests with changed bank account details in an attempt to steal funds from LPs”.

There are two reasons I bring this up. First, you’re having this cybersecurity briefing. But the second reason I bring it up is because I called Mr. Jelincic’s attention to this about a month ago, when I first became aware of it. And I’m concerned that if he chooses to raise the issue in closed session, this could become another of these very strange situations where accused of leaking something that was actually told to him, but it appears to you that he’s telling it to others. That’s a great concern.

I’m also here, I guess, to raise the larger issue that I’m quite perplexed about the status of his censure. It’s been, I think, more than three months since he was promised a public process. And
I think we’ve all been waiting to see the charges, to see a public process, and nothing has happened.

Could – could some kind of statement from the Board President be made about the status of what’s going on with that?

Board President Robert Feckner: When I’m prepared to do so, there will be one.

Flaherman: So you’re not prepared to make a statement.

Feckner: I am not.

Flaherman: So we have a situation of secret charges, and a secret trial, and..

Feckner: No, I said when I’m prepared to…

Flaherman: Well, that’s very unfortunate. Thank you very much.

Not surprisingly, Feckner this month at 2:10:36 completely brushes past the issue of how illegitimate and one-sided this entire procedure has been:

Feckner: I do want to address a comment that was made last month under public comment. I state that I held a meeting with Mr. Jelincic and his counsel and Mr. Slaton. I listened intently to all the information delivered by both sides, then rendered my decision. And my decision was that Mr. Jelincic had violated our confidentiality rules. I then a month ago met with Mr. Jelincic about the issue, informed him that he was going to be receiving training, additional training in Bagley-Keene and open meeting laws. And with that, I considered the matter to be closed. And the same comment I’ve had for the media the past, I will not disclose the information, because it was a confidential matter, and in doing so I would be violating the same issue. So as far as I am concerned, this matter is closed.

To conclude:

It’s an insult to justice as well as intelligence for Feckner to depict CalPERS’ cover up as virtuous and justified. The entire board stood by as Slaton smeared Jelincic while presenting not an iota of evidence. Jacobs piled on procedurally, proof that this sorry charade was planned and Jacobs was putting his finger firmly on the scale. Jelincic was repeatedly told that he would have a public process and ample time to respond. CalPERS reneged on all these promises.

Normally, disciplinary proceedings are held confidence to protect the reputation of the accused. Here, instead, we have Jelincic victimized in public and the proceedings dragged behind closed doors. This is all about protecting power-abusing perps rather than doing what is best for CalPERS beneficiaries and the board. Any board member who stood pat while this inquisition went forward has to recognize that they can be hauled up for and found guilty of phonied-up charges too.

Slaton and Jacobs had over two months to prepare for a session that was promised to be held in public. The very fact that they maneuvered it into private strongly suggests whatever “complaints” Slaton had would not stand up to scrutiny.

As we’ve indicated repeatedly, and Jelincic selectively indicated, the “complaints” against him appear reflect board ignorance as to what is in the public domain. The fact that something is discussed in CalPERS’ closed session does not make information confidential. Public information does not magically become confidential by discussing it in camera.

Jelincic was never given a proper opportunity to respond to the evidence presented against him. He promised a minimum of two weeks to respond to the information presented against him. Instead, Feckner rendered a decision knowing that Jelnicic was not given the time or opportunity to rebut Slaton’s claims against him.

Slaton’s remarks about Jelincic in January were and still are defamatory and unsubstantiated. The fact that a demand for resignation led only to Jelincic going to a training that he say he would have wanted to attend regardless strongly suggests that there was nothing to them and the star chamber censure was to preserve the board’s tattered image rather than serve the interests of CalPERS’ beneficiaries.

CalPERS’ attorneys are all too willing to treat CalPERS as a law unto itself. As white collar criminologist and law professor Bill Black wrote:

Feckner’s revelation also means that Feckner and Jacobs have zero excuse for not insisting that Slaton provide Jelincic and them with the specific charges before Slaton made the facially slanderous charges at the board meeting that I quoted. It is a breach of their and Slaton’s fiduciary duties to CalPERS to knowingly allow one board member to accuse another board member of committing a crime under California law without having vetted the claim to demonstrate that it was well-founded. Jacobs’ actions go against every normal reflex of a corporate general counsel.

The general counsel is supposed to play a leadership role in rehabilitating a corporate culture like CalPERS that has lost its integrity. Jacobs has failed this test.

Ashley Dunning, who is purported to be a reputable attorney, is stooping to CalPERS’ dubious standards with her conduct in this hearing and her astonishing efforts to gag Jelincic through her over-reaching claims that the bogus April hearing and related communications are attorney-client privileged when Jelnicic sent a notice of adverse interest before she was even assigned to his matter.

As Bill Black warned CalPERS board:

Your job is not protecting officers and board members from criticism by Jelincic when they fail to work aggressively to fix that toxic culture. CalPERS’ culture became toxic over a decade ago precisely because there was no one like Jelincic on the board who was willing to criticize and willing to ask the officers the demanding questions that a real fiduciary asks when serving on a board. The long practice of CalPERS board members “protecting this organization” has been causing devastating harm to CalPERS’ members for over a decade. To fix CalPERS, California should appoint more people like Jelincic.


1 Also bear in mind that had a public hearing taken place and staff and board members were concerned that some of the accusations or defense might require discussing confidential material, the board could use the same process that judges do, to go into chambers, decide what could be aired publicly versus what if any needed to be handled off line, and proceed accordingly.

CalPERS PRA on Jelincic hearing January

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CalPERS Slaton v Jelincic
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  1. AA

    “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” – Bastiat

  2. flora

    The board’s actions with Jelencic’s promised “public disciplinary hearing” look like old-style machine politics or particularly nasty academic infighting.

    From what I have read in NC’s posts, JJ Jelincic’s questions and reponses to the CalPERS board have been on-point and termperate. Therefore, Jelincic’s comparison of Matt Jacobs to Roy Cohn is a startling rebuke, and well deserved. The gloves are off. I’m sorry CalPERS members are losing Jelincic’s advocacy on their behalf by his retirement. I’m very glad he is “not going quietly.”

    Thanks for your continued reporting on PE and CalPERS.

    1. reslez

      Indeed. Mr Jelincic has my sympathy and my respect. It’s a shame that he won’t be running for re-election, but he deserves a break. I hope the other candidates honor his example by emulating it.

  3. JTMcPhee

    So there’s this discussion today about how species morph and adapt.

    Looks like the rats and roaches and silverfish that make up CALPers have developed a tolerance and resistance to strong light and fresh air. Like the rest of the global Corrupticon…

  4. Loblolly

    How widely known is this beyond NC. Do California pension holders have any idea how screwed they are?

    1. John Wright

      As a CA taxpayer I want to interject that if CALPers falls short in its investment goals, it is the responsibility of the city/government entity from which the pension holder retired from to make up the difference.

      The taxpayers need to make the pensioners whole in the event of a shortfall at CALPers.

      Thus this issue involves many more people than just CALPers and pensioners.

      The pensioners, providing they retired from a financially healthy government entity, are to some extent protected .

      Those pensioners retiring from California cities San Bernardino , Vallejo, and Stockton might be at some risk as these cities had financial problems and declared Chapter 9 bankruptcies. I believe they sought some pension relief as a result.

      Having a well run CALPers benefits taxpayers and pensioners throughout California.,

      Yves and NC are doing the citizens of CA a valuable service.

      1. SurfPuppy

        Those pensioners retiring from California cities San Bernardino , Vallejo, and Stockton might be at some risk as these cities had financial problems and declared Chapter 9 bankruptcies. I believe they sought some pension relief as a result.
        No, they were not addressed in BK (even though Judge Klein in Stockton said the pensions could be cut in BK) and all will almost surely be back in the BK system. The bottom line is CalPERS is offering pensions they cannot pay for…allowing employees to retire as young as age 50, with 90% pensions with COLA, with current mortality spans running to age 85 (for females); while paying in amounts that do not pay for that kind of pension. I know a cop who “retired” at age 50 with only 26 years of service credit and started with a $100K+ pension. Needless to say the math does not add up; this “cop” with his 3% annual COLA is now making MORE in “retirement” than when he was actually working. In fact he has made more in his 5 years of “retirement” than he made in his first 15 years of actual employment. If he lives to age 80 he will have pulled down 400% MORE in his 30 years of “retirement” than the 26 years he actually was employed.

  5. Tom Stone

    This is how California’s Government works at the State level.
    Any pretense of Representative Government left the building with Elvis quite a few years ago.

  6. TheCatSaid

    No Board discussion or response to Jelincic’s comment?! The CalPERS Board is scandalous in how it has breached it fiduciary responsibilities. As this post documents, they keep piling up their own wrong-doings. The current Board members and their Counsel should be thrown out. They are not fit for purpose (i.e., for any purpose that has to do with fiduciary duty to CA’s public employees and retirees).

    Slight diversion–Did anyone catch CEO Marcie Frost’s initial statement, where she praises that CalPERS has done so well in relation to supposedly reducing its fees? I wondered if that was based on the misleading Report NC posted about a couple weeks ago, in which CalPERS changed the reporting method in their accounts and buried the information in a footnote, so that comparisons of YOY fees were misleading.

    1. flora

      The board no doubt sees JJ’s retirement as a “victory” for their current practices. bah!

  7. Fool

    Yves, I think it would be helpful if NC’s past coverage of CalPERS could be consolidated into a more concise & holistic narrative of events that precede the board trying to force out Jelinic (much of which has been reported on — if not brought to light — here, e.g. the bribery scandal, the shoddy internal investigations, the misleading valuation metrics, the backroom decision-making, now this). It’s hard to keep up with!

    NC’s ongoing work on CalPERS is some of the most important in financial journalism; yet the sheer technocratic complexity makes it difficult to convert this work into the political change we’d like to see. I think it would be effective if we could figure out a way to package it into something more digestible.

      1. Fool

        Cat – That is not very helpful!

        My point was: how can the work that NC has done exposing the atrocious governance at the largest public pension fund in the US be compiled/presented in such a way to enhance public awareness and (in turn) mobilize political action?

  8. Oregoncharles

    Just a thought: Slaton, Feckner, and Jacobs are acting as if they have something really serious to cover up. Has anyone looked at their personal bank accounts lately?

    Yves and Bill Black are sniffing around the edges of something that could be much worse than mis-management.

    1. RUKidding

      Disclaimer: I have no idea what Slaton, Feckner & Jacobs may or may not be hiding.

      That said, throughout the various, very detailed posts written up about the abuses and poor performance by CalPers Board members, I have always said: what are these people HIDING? Are they getting some sort of payola? Pay for play? It’s hard not to speculate that something dirty is going on, especially given some past practices at CalPers.

      Sure looks like that to me. They continue to do what they’ve been doing despite the best efforts of NC and other investigative journalism from such organs as the Sac Bee, the LA Times, the San Jose Mercury, the San Diego Union Tribune, the WSJ, among others.

      Sad to say that the State Controller, Betty Yee, the State Treasure, John Chiang, and our Governor, Jerry Brown, continue to completely IGNORE these articles that many complaints sent to them in writing by citizens.

      For shame!!

  9. John Zelnicker

    Yves – Thank you, once again, for your perceptive analysis of the ongoing saga of CalPERS’ corruption and mendacity.

    I’m sorry JJ is leaving the Board, but he has suffered enough for his integrity. Perhaps, Flaherman and Brown can get elected and there will be 2 true public advocates rather than just one on the CalPERS Board.

    1. RUKidding

      I’m both sad and glad to JJ Jelicic is leaving the Board to retire. Sad bc he’s done such hard work to fight against the very obvious corruption there. Glad bc he deserves a break.

      I’ve worked in a couple of hostile & toxic work environments, and I know what it’s like to keep fighting against clearly corrupt individuals who being protected by someone higher up. It’s just exhausting and demoralizing.

      Thanks to JJ for his brave and valient efforts to fight for honesty and transparancy on the CalPers Board. It has not been an easy fight.

      For shame!!

  10. RUKidding

    Thanks for the continuing excellent coverage on this blighted situation, Yves. Keep it up! Much appreciated.

  11. Sluggeaux

    “As far as I’m concerned, this matter is closed.”

    That is what CalPERS board president Rob Feckner said to Michael Hiltzik of the Los Angeles Times newspaper for his May 2, 2017 article about this kangaroo court. He clearly was lying. Feckner and Slaton, along with any board members who slept while the CEO was taking kick-backs from a Private Equity placement agent who was a former board member, need to be sued by the members and beneficiaries for violating their constitutionally-mandated fiduciary duties.

    It’s clear from the Slaton email above that Feckner and Slaton (and their silent allies on the board) are taking dictation from staff rather than engaging in oversight. Under the current governance structure, the General Counsel and Fiduciary Counsel work for staff, not the board. Deference to the advice of counsel who is employed by the parties who they are charged with overseeing is nothing less than an abandonment of the board’s fiduciary obligations.

    Sadly, Governor Jerry Brown and former Attorney General Kamala Harris also seem to have abandoned any pretense of oversight long ago. Governor Brown, former-Attorney General Harris, current-Attorney General Xavier Becerra, Controller Betty Yee, and Treasurer John Chiang are supposed to be the “adults” in the room. Their acquiescence in this train-wreck exposes them as a bunch of worthless political hacks. This is more “Holder Doctrine” pretending; the CalPERS board and the public officials over it are like a fire department that is more concerned with conserving water to keep their fire engine clean than with putting out fires.

  12. PAinter's DRunk


    Something is rotten in California. This sort of parody can only continue if there is a good bit of cash involved.

    Perhaps special pension accounts ?
    Or perhaps “donations” via a PAC to certain state officials or even CA congressmen ?.

    No, organization would fight this hard if there wasn’t,

    1. Sluggeaux

      What is rotten? “Placement Agents” affiliated with lobbying for the political parties — but especially the Democrats — have been raking-in hundreds of millions in “fees” from funds invested-in by CalPERS. These “fees” are then rebated to the politicians. Was going on furiously during the late 2000’s when CalPERS PE portfolio ballooned, until about 2010 when Cuomo as New York AG started issuing subpoenas.

      The furious cover-up is to avoid the “Placement Agent” money trail being traced to Brown, Harris, Yee, Chiang, et al. Villalobos blew his own brains out rather than snitch. Sound criminal? Only Cuomo in New York and the Feds went after CalPERS on this. The CEO is in prison, and the California AG and State Auditor haven’t done a thing to follow up. Figure it out…

  13. robnume

    As A California taxpayer, I would like to thank Yves and all of the others who have contributed to her excellent coverage of the ongoing trainwreck that is CalPERS.
    I have used the info provided by Yves to contact various and sundry folk who might actually listen to our grievances, pay attention to the evidence and hope that other CA citizens here at NC will do the same.

  14. SurfPuppy

    Slaton, Feckner & Jacobs could ALL be charged civilly for breach of “fiduciary” duties. They could also be charged civilly and criminally under federal RICO.

    The CA AG will not file any civil or criminal charges, that is a certainty; but the US Attorney could, and should, to prevent the wholesale destruction and stability of the state, and possibly the country.

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