California Treasurer John Chiang Calls for an Independent Investigation of CalPERS CEO Marcie Frost’s Hiring Misrepresentations

Despite the appearance of the CalPERS board backing CEO Marcie Frost via granting her a salary increase and an $85,000 bonus and pointedly ignoring documents that clearly demonstrate that Frost made multiple misrepresentations during her hiring process and after she joined CalPERS, one of the adults in the room is not willing to sweep the scandal under the rug.

The Associated Press and the Sacramento Bee reported that Treasurer John Chiang has called for an independent investigation of Frost. As much as this is a big step forward, it begs the question of why Chiang is taking this move when the board does not meet again for two months. Is this to allow him to have it both ways, to say he tried to do the right thing in a way that may come to naught? The proof will come if he takes any follow up measures that show he is serious.

Regardless, Chiang’s press release confirms that the allegations are serious enough that Frost and the board cannot try to brazen this controversy out and they need to have a truly independent investigation. Frost is already tainted and we are getting more and more reports from CalPERS employees of how they feel betrayed by the board by (until now) giving Frost a free pass.

And where, pray is the other designated adult in the room, Betty Yee? Why has she been been absent without leave? She’s a statewide elected official and a trustee, and she’s evidenced no interest in doing what is right for CalPERS beneficiaries and California beneficiaries. Perhaps this dereliction of duty is the result of her being confident in her odds of being re-elected this November?

From the Treasurer’s website:

“Since her appointment in June 2016, Marcie Frost has largely proven her competency as the CEO of the nation’s largest pension fund, and I have submitted extensive performance evaluations that reflect my favorable opinion of her. However, recent ethical questions are not so much focused on her work once on the job, but rather on how she got the job to begin with.

“Now, some are accusing her of knowingly and willfully making false and misleading statements regarding her pursuit of a college degree at the time she applied to CaIPERS. Others concede that the misstatements may have been the result of benign misunderstandings, but point to her benefitting from the misimpressions by failing to set the record straight in a timely way.

“I can no longer sit on the sidelines, watching how some have been quick to paint Ms. Frost as an untruthful villain, while others have too casually dismissed what are serious allegations. Both are a rush to judgement. As someone who has always favored evidence-based decision-making, I believe we must focus on a fact finding mission that ascertains what information was initially submitted and where that information was unfortunately distorted.

“Integrity and transparency matter. Ms. Frost’s, as well as the pension system’s long-term success depend on vigilantly maintaining the public’s trust.

“Therefore, I am requesting we conduct an independent review — by a neutral third party — that removes any inherent bias that the Board, including myself, may have towards our CEO. This will allow us to say, with a straight face, that CalPERS does not act in an arbitrary manner.

“Once this independent firm reviews the allegations and reports its findings to the Board, we will have the objective information necessary to make an informed decision. An opaque process that lacks independent fact-finding, due process, and thoroughness is no way to conduct state business or resolve a situation impacting millions of members and billions of dollars.

“While I believe Ms. Frost has performed well in her role and hope she will be completely exonerated, my fiduciary responsibility to CalPERS and its nearly two million members must come first. We have a duty to follow the facts to whatever ends serve the best interests of our members.

“An organization with the strong reputation of CalPERS needs to have a leader with unimpeachable integrity. If we do nothing, we will be perpetuating a double standard. Worse yet, a cloud of controversy will continue to hang over the head of the nation’s largest public pension fund. Until that cloud is removed, pundits will continue to question the decisions made by its leadership.”

This is a big step forward. The part that concerns me is that Chiang calls for the report to be given to the board. Why not the wider public?

Unfortunately, the press still is running interference for Frost. Even though the Associated Press was first out of the gate with this story, and in the headline and first paragraph cited Chiang’s call for an investigation, it closed with:

The CEO, who led Washington state’s pension system before moving to California, is accused not of lying but of failing to correct a misperception.

This is simply not accurate. We have repeatedly shown documentary evidence showing misrepresentations by Frost, including her misrepresenting her educational status on a form sworn under the penalty of perjury in Washington. The Financial Times confirmed our reporting and even went out of its way to do so by headlining its story, “CalPERS CEO Misstated Educational Background During Hiring Process.” The Los Angeles Times, more politely, described how Frost’s and CalPERS’ excuses don’t add up:

It’s implausible that the communications office simply fabricated the assertion that Frost was pursuing a dual bachelor’s and master’s degree at Evergreen in 2016. More recently, the communications office has pointed a finger at Heidrick & Struggles. According to a document Webber reproduced, Heidrick & Struggles informed CalPERS in 2016 that Frost was “currently matriculated in a dual degree program” for a bachelor’s and master’s degree at Evergreen. But where did that impression come from?

And Chiang acknowledges that: “..some are accusing her of knowingly and willfully making false and misleading statements.”

The Associated Press story makes it sound as if this controversy is all about an unnamed blogger, ignoring that it has been widely picked up by the press, including Bloomberg and the Wall Street Journal, and distorts what Chiang clearly said, by inaccurately claiming that “The CEO, who led Washington state’s pension system before moving to California, is accused not of lying but of failing to correct a misperception.”

And Adam Ashton minimized the importance of the Heidrick & Struggles report, which clearly stated that the Frost was currently matriculated in a dual bachelor’s/master’s degree program, which Heidrick & Struggles clearly states, “The accompanying report represents a composite of information furnished by the
candidate.” Heidrick & Struggles, a top headhunter, has been downgraded by Ashton to being a mere “consultant”.

Ashton’s story also includes lengthy quotes from board members Bill Slaton and Priya Mathur, with Slaton saying that Chiang’s deputy had the opportunity to question Frost in her annual review (as if that is at all the same as an actual investigation), and Mathur, who defended the bribe-taking, now imprisoned former CEO Fred Buenrostro to the bitter end, saying that Frost is the right person to run CalPERS. Help me.

If you live in California, it is important to back Chiang’s call for an investigation, since the the rest fo the CalPERS board, ex Margaret Brown, seems determined to keep doing the wrong thing. Underscore why this probe is essential, applaud his call for it to be independent and ask for the findings to be released to the public. Please write or e-mail Chiang at:

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

It would be very helpful to write Betty Yee by including the letter to Chiang with a cover note asking why she has been silent on Frost’s resume misrepresentations and hasn’t joined Chiang’s demand for an investigation. Or if this you are time-stressed, you can just cc her:

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

On the letter to Chiang be sure to cc:

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

Dr Richard Pan (; fax 916- 651-4906 or 916-914-2179 and Freddie Rodriguez in the Assembly (; fax 909-902-9761).

Board President Priya Mathur ( on behalf of the CalPERS Board and Marcie Frost (

Thanks so much!

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  1. The Rev Kev

    To repeat a comment of mine elsewhere, maybe CaLPERS could hire Heidrick & Struggles to be the investigative body. After all, they are familiar with the case. Thing is, if CaLPERS does come aground on all these scandals stacking up, you do wonder if people at Heidrick & Struggles are worried about collateral damage and doing a reputational Arthur Andersen.

  2. tegnost

    kicking the can, but now the can is an officially acknowledged can…
    I fail to understand the double standard on fabrications… some people have zero tolerance given, while for others it’s no big deal. To me, it seems like lying to say she was involved in a degree program… that said in our education first ivy league pac 10, or 12 or however many super universities are we really not looking for a person who has made that investment and deserves an opportunity? Evergreen is one of those design your degree places, similar to where I went, which is great for personal growth but CalPERs is a major pension fund. In credentialled California. It stinks to high heaven. Where is the payoff now for this organization whose former leaders are in prison and or resigned in disgrace?

  3. Trick dick

    Everyone needs to forget about her education except for the fact she lied about it. She also lied under the penalty of law. She should be fired and jailed. But wait, what about the HR Director who’s shop all of this is happening, why isn’t Ms Campbell held accountable? Why isn’t Doug Hoffner held accountable, he’s in this up to his neck also. The board needs a reality check, a $ 84,000.00 bonus and a 4 % raise, give me a break

    1. Adam

      I’ve been mentioning Mathur and Jacobs when I email or call my state reps and the governor’s office, so I can at least start including others as well. Are there any other Calpers employees that should be mentioned?

      1. Yves Smith Post author

        Thanks for mentioning Jacobs. I don’t think going overboard on CalPERS senior execs is wise (save mentioning the Asubonten fiasco) since you risk being assumed to be either a disgruntled current or ex employee, or else someone who can’t say anything nice about CalPERS and therefore must be a right wing pension hater.

        Also, recall Mathur is an elected official. So the issue with her is that she is symptomatic of what is wrong with the board, and the Governor needs to address that (some competent appointees would make a real difference) and appoint some solid candidates (knowledge of finance/investments, for instance) who are prepared to roll up their sleeves, rather than treat the board assignments as a reward for cronies.

  4. David in Santa Cruz

    It’s outrageous that a $360B fund is paying $500K to someone with no record of post-secondary study.

    It is outrageous that a clerk-typist with zero investment, financial, or actuarial experience is hired as CEO of CalPERS.

    This is a cover-up of corruptly influenced investments. Follow the money.

  5. ALM

    I am gratified to see that the drum beat continues. I have written to Chiang to express my thanks for the public position that he has taken and to Lee to inquire why she hasn’t. And I will follow-up with another round of letters to my elected state representatives and senate/assembly committee members and chairs because Frost’s raise and bonus cannot be justified.

    Do you recommend that we cc individual Board members with our correspondence to public officials or just limit the cc:s to Mathur (and Frost)?

    1. Yves Smith Post author

      Even better if you cc all the board members. The suggestion to cc Mathur on behalf of the entire board was to make it easier for people who are time-stressed.

  6. flora

    Glad Chiang is calling for an independent investigation. Expect the board will stonewall the request. That could lead to an interesting series of articles. (And, where is Yee?)

    Thanks for your continued reporting on CalPERS, PE, and pensions.

  7. John Zelnicker

    Yves – It appears you copied Dr. Pan’s phone numbers from the last time you posted them with a missing digit in the second fax number.

  8. Brooklin Bridge

    This will allow us to say, with a straight face, that CalPERS does not act in an arbitrary manner.

    These people specialize in straight faces.

  9. Anon

    Chiang had to go public independently to put the weight of his constitutional office behind the request because he knows the Board will not vote for it internally. They don’t want an independent investigation simply because they already know the result–Frost did lie, and they will have to fire her. Look for her resignation now, likely pressured by the Board.

  10. Donna Snodgrass

    Don’t leave out the representatives of CalHR or the State Personnel Board. If any state employee hired had submitted an application like this, and then been busted, either of those agencies would uphold any and all disciplinary action against them. So union reps take note. Apparently lying on a state application form is not cause for any disciplinary action. Save this in your files to use for any case you represent.

  11. RUKidding

    Thanks again. Today I will send out more emails and snail mails… for what it’s worth.

    Chiang has been too lax on this, as has the Governor.

    The whole thing makes my blood boil, but here we are. Thanks for the work on this. Good reporting.

  12. Brian

    This is beginning to look like another train wreck with a large curtain erected around it to hide prying eyes. We have the same cast of characters and expect a different outcome. Betty Yee signs the checks. We have the treasurer claiming Frost is a competent employee. Well he knew about Buenrostro, Asubonten and Frost from the first time he read the documents just like anyone else. Chiang did not act then, so is there a reason to assume supression of evidence is a factor in all? The employees don’t seem to agree with Chiang about the boss, and they have to work there day to day. I feel bad when the AP is involved, as their version of news is now self censored by leaving out important facts or threads of an ongoing story. One really wonders how bad things are when the first defense heard from on high begins by disputing the facts publicly. Why would Chiang publicly support a perjurer that we know gamed the requirements?
    Another minor question, why would Mathur use a gmail account for government business?

  13. Brian

    I realized a good reason Mathur would use Gmail. Because all of her inbound communication via CalPers will be read by Frost and the rest of her group, and Mathur may or may not receive the email at all. This should tell us a lot about the internal workings at CalPers.

    1. Brandon

      I’m curious if similar to the Federal Government if all CalPERS communication is supposed to occur solely via CalPERS email system and if the use of a personal Gmail account to conduct official CalPERS business is in violation of any laws or bylaws.

  14. Brandon

    Ok I have done my part and emailed Betty while CC’ing everybody else expressing [my] concern with her silence and inaction in regards to Frost’s resume misrepresentations and Chiang’s demand for an investigation.
    Now it’s your turn.

  15. ThisIsNuts

    I just sent follow up emails to everyone on this list and copied many other Board members ( Also copied my State Senator and Assemblymember.

    I really applaud your reporting and truth-seeking. Thank you.

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