The CalPERS Executive Team Demands a New Loyalty Oath!

EASTSIDER-Freaked out  by a few honest Board members, I hear the new secret Oath of Office for the full CalPERS Board is the old proverb, “See No Evil, Hear No Evil, Speak No Evil.” 

In the case of a normal Board, the staff are there to support the Board. At CalPERS, the reverse is true. The Board is there to do whatever the President, the CEO, and the General Counsel tell them. Or else. 

For those who don’t pay much attention to CalPERS, three people control the flow of information, as well as meting out secret punishment. The Board President (Henry Jones), General Counsel (Matt Jacobs), and CEO (Marcie Frost) control it all, using a byzantine document called the “Board of Administration Governance Policy.” Instead of fighting back, a serious majority of the Board members simply roll over, say nothing, and go along for the ride. 

The Secret Handshake Club 

In a move that would make Senator Mitch McConnell envious, General Counsel Matt Jacobs viciously attacks any Board member or former Board member who dares to state unpleasant truths about CalPERS. Since he can’t vote, he uses President Henry Jones as his front, even as most of the Board remains mum so they can be part of “the team.” 

Witness last year’s over-the-top attack on Board member Margaret Brown, which was evidently too much even for the LA Times: 

“On Dec. 20, Board President Henry Jones notified Brown by email that he was unilaterally imposing “private discipline” on her, ostensibly because she used “CalPERS” as part of her social media handles despite being advised that it was against California law and CalPERS policy. 

“Jones’ power to discipline Brown is evidently plenary. It doesn’t require the consent of or even consultation with anyone else on the 13-member board of administration, and isn’t appealable. If you think his “private discipline” sounds like the “double secret probation” levied by Dean Wormer on the refractory brothers of the Delta frat in the movie “Animal House,” you won’t get an argument here. 

“But that was played for laughs. This is deadly serious. Jones’ action provoked Brown to file a lawsuit on June 16 in Sacramento Superior Court. She’s seeking a court order forcing the board to rescind her discipline and provide her with an administrative appeal hearing before a neutral judge. 

Contrast her treatment with Board member Theresa Taylor’s indiscretions below. You will be unsurprised that Theresa may be a cheat, but it’s OK because she is a charter member of the “see no evil” team. 

“As we’ll review, first by attacking Brown, Taylor gave the Buyouts story more prominence than it otherwise would have had. Second, Taylor is under investigation for similar abuses to the ones Meng engaged in, specifically, for multi-year failures to report significant income on her Statement of Economic Interest (Form 700), California’s required annual financial form for public officials. That means Taylor is not a credible spokesperson on any matter that relates to propriety or legality. Having her speak up for CalPERS is about as credible as having Trump’s former attorney/fixer, the felon Michael Cohen, defend Trump. 

“As an aside, the election committee for Taylor’s 2018 campaign is also under Fair Political Practices Commission investigation (case 2020-00074) 

“Taylor sticking her head above the CalPERS parapet simply calls more attention to the allegations that Taylor hid income, despite the Forms 700 requiring an attestation under the penalty of perjury. Taylor has confirmed the charges by amending some of her Forms 700 four years after the fact to include the income that the FPPC complaint said she failed to report.” 

Moving to 2021

This year the “see no evil” Board members were driven even further by Jones, Jacobs, and Frost. If you thought the preceding was bad, just keep on reading. Inadvertently, it appears that Taylor outed a staff member of CalPERS who had committed fraud, and yet Henry Jones, Matt Jacobs, and Marcie Frost did nothing at all to her after witnessing her reveal confidential information about the fraud at CalPERS. 

“Board Member Theresa Taylor: Finally I want to address the issue on terms of other notification of all employees that Ms. Brown mentioned. Our CEO lets us know when those occasions arise when they are very serious but something like that fraud incident that we are referring to that makes sense to come forward to the board but as a union steward for SEIU I think understanding there is a lot of actions that take place against employees I’m not sure we need to know every single thing.” 

In April, more came out and it wasn’t pretty: 

“As you can see from the embedded filing below, CalPERS is suing Gloria Najera, a former employee it says embezzled $685,000 from beneficiaries, including, Wells Fargo style, from a beneficiary’s bank accounts. 

“The civil claim is sketchy on the timetable, but Najera was a clerical worker responsible for updating beneficiary addresses and bank direct deposit information. That apparently also gave her access to at least the last four digits in their Social Security numbers. Najera used this information to pilfer directly from the bank account of one beneficiary to the tune of nearly $69,000. For nine others, she diverted funds from dormant CalPERS accounts (where CalPERS had reason to think the beneficiary was still alive but had only out-of-date bank deposit information) to bank accounts controlled by Najera and co-conspirators. 

“Yet despite CalPERS allegedly informing the police about the theft back in January, the perp of this huge embezzlement of beneficiary trust funds hasn’t even been arrested, much the less charged.” 

If you’re still not disgusted by the behavior of Jones, Jacobs, and Frost, check this out. General Counsel Matt Jacobs now believes that he is literally above the law. Refusing to answer detailed Public Records Requests by former Board member (and all-round good guy), JJ Jelincic, he got CalPERS sued and yet he continues to stonewall

“CalPERS under its general counsel Matt Jacobs has more and more openly been taking the position that it is above the law. A slapdown is long overdue. 

“Both of the matters the lawsuit targets are strong on legal and public interest grounds. We’ll get into a bit more detail below. The short overview is that they come out of sweeping and highly dubious denials of two different Public Records Act requests that Jelinicic submitted. One focuses on to impermissible secret board discussions shortly after then Chief Investment Officer Ben Meng’s sudden resignation last August. The second involves CalPERS’ continuing efforts to hide records showing how it came to overvalue real estate assets by $583 million. Yet CalPERS not only has said nary a peep about bogus valuations are larger than the total amount it was slotted to invest in a mothballed solo development project, 301 Capitol Mall, but it continues to publish balance sheets that include the inflated results. 

“We believe CalPERS will be even more inclined than usual to fight these Public Records Act requests because the filing seeks remedies beyond release of the records. First, it requests that CalPERS be found to have violated the Bagley-Keene Open Meeting Act. Second, to the extent that the judge rules that the board discussed items in closed session that should have been agendized for and deliberated in open session, the suit asks that board members be permitted to disclose the contents of those particular discussions in public. Third, the filing calls on the court to require that CalPERS make video and audio recordings of all closed sessions and keep them for five years.” 

For this article I won’t get further into the weeds, but it is clear that Jacobs is using beneficiary monies to duck, bob, weave and generally stonewall answering the questions. Including a clearly long and expensive (for us, the beneficiaries) legal battle over everything, such as a bogus “demand” to withdraw the suit. Sheesh! 

A Final Slap in the Face of Beneficiaries and taxpayers 

Publicly embarrassed by numerous investment mismanagement examples by the seemingly incompetent CalPERS staff, last year, Jacobs resorted to the last refuge of a scoundrel -- make everything secret! As I wrote in CityWatch back in August 2020: 

“While all this was proceeding, there was no mention of AB 2473, still floating around the Senate as a DO PASS measure allowing CalPERS to hide their private equity investments from everyone. That’s right, no public records at all! So, yours truly filed the following with the Senate on August 6. 

“To the Committee:

“My name is Tony Butka, and I am both a CalPERS beneficiary as well as a weekly columnist for the online LA Newspaper Citywatchla.com. I am asking the Committee to kill this bill on the grounds that CalPERS made a lot of deliberate misrepresentations to the Legislature; namely that their ask was just to get some privacy which would allow them to play private equity games with the big boys.

“I have attached a couple of articles to demonstrate how nuts things are at CalPERS, as they engage in internal witch hunts, and make bad investment decisions which they seek to hide under the language of this bill.

“First is my recent article on just how slimy and secretive the current Board and the staff who own them have become. Second, there is a NakedCapitalism post regarding their flat-out incompetence in investing.

“Finally, you should note that their big time Investment Officer, Ben Meng has resigned. I attach an article from August 6th which provides the details.

“While the request was phrased in nice logical terms, underneath CalPERS is asking you to sign off on a secrecy provision which will certainly blow up in their faces. They can't even provide reasonable returns on their own and now want to play with the Wall Street heavies. God save us.

“Finally, in the event that this atrocity passes the legislature, the names of the legislators who voted for it will be remembered. There are almost 2 million beneficiaries of CalPERS, and they certainly include registered voters in every legislative area of the State, be it Assembly or Senate. Bad enough investment results would likely result in a full court press to reduce the pensions of existing and prospective pensioners. Think about it.

“I implore you to kill the bill.


Tony Butka, CalPERS beneficiary, Glassell Park”


Once the Senate Committee realized that they were being played by CalPERS, the author withdrew the bill. 

However, in an incredible demonstration of hubris, this session, CalPERS was back again with their hide-the-beneficiaries-money-investments bill. This time, none other than Dan Walters, the dean of Sacramento pundits, had enough. The header of his article tells it all: “Pending bill opens door to pension corruption at CalPERS:” 

“Assembly Bill 386 sailed through the Assembly Judiciary Committee last week on a unanimous vote with virtually no discussion about its provisions. 

The measure also received express treatment a few days earlier from the Assembly committee that deals with public employee matters. 

Given its cavalier handling, one might think that AB 386, carried by Assemblyman Jim Cooper, an Elk Grove Democrat, is just another minor change in law. In fact, however, it would allow the financially shaky California Public Employees Retirement System (CalPERS) to semi-secretly lend out untold billions of dollars by exempting details from the state’s Public Records Act. 

Potentially it opens the door to insider dealing and corruption in an agency that’s already experienced too many scandals, including a huge one that sent CalPERS’ top administrator to prison for accepting bribes.” 

Since then, this Bill has moved fast, and is already over in the Senate, landing in the Standing Committee on Labor, Public Employment and Retirement. 

Chair - Dave Cortese SD15 (Santa Clara area)

Capitol Phone: 916-651-4015 

Vice-Chair - Rosilicie Ochoa Bogh (Riverside, Redlands, Yucaipa area)

Capitol Phone: 916-651-4023 

Member - Josh Newmen SD29 (mostly Orange County, City of Industry)

Capitol Phone: 916-651-4029 

Member - John Laird SD 17 (Santa Cruz coast to San Luis Obispo)

Capitol Phone: 916-651-4017 

Member - Maria Elena Durazo SD24 (Los Angeles, including Northeast LA)

Capitol Phone: 916-651-4024 

If you know anyone who is a CalPERS beneficiary, consider reaching out to the Committee members, letting them know this is a bad bill just full of corruption opportunities. I have provided the contact information for their district offices. 

I don’t know if these people are on the take or just plain don’t give a damn about how the corrupt Jones-Jacobs-Frost management team plays with the something like $440 billion of pension money (in secret), potentially jeopardizing pensions for over 1.2 million beneficiaries. 

If any of these elected officials tells you everything is fine, show them this Sacramento Bee article

“CalPERS meeting planners misspent public money on board meetings and conferences held outside Sacramento in 2016 and 2017, according to an internal audit report. 

“The report, which provides few top-line totals for the expenditures, says the retirement system’s Office of Stakeholder Relations improperly paid for cocktail tables, wine glasses, tubs of ice and corkage fees to outfit a “hospitality suite” at an offsite board meeting in July 2016. 

“This story is a subscriber exclusive. 

“The office spent $136 per day on attendees’ meals on the first day of the multi-day meeting, exceeding the state’s daily limit of $41, according to the audit. 

“And it booked hotel rooms in advance on Meeting Planner Account cards issued by the Department of General Services that aren’t supposed to be used for lodging, auditors found.

State employees typically are supposed to pay for their own rooms and then submit travel expense claims to cover the costs. When some of the rooms booked in advance by CalPERS went unused, the system had to pay about $5,500 in attrition fees, according to the audit. 

‘The audit, completed in June 2019, was recently obtained through a Public Records Act request by J.J. Jelincic, a former board member of the $459 billion fund. 

“Auditors reviewed 20 transactions, half of the 40 transactions made on the Department of General Services-issued cards from July 2016 through June 2018, according to the report. Auditors identified unallowable expenses on nine of the transactions, the report says.” 

Read this article. Read Dan Walters piece on CalPERS for CalMatters. Get angry, be furious that our politicians are evidently comfortable with corruption. Contact them. If you’re a CalPERS covered employee/retiree, contact CalPERS’ so-called CEO, Marcie Frost too. Just don’t hold your breath for an answer. 

Stay tuned for even more soon.


(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Photo: Max Whittaker / Getty Images.     Edited for CityWatch by Linda Abrams.