Grand Ave Project PENSION MONEY INVESTOR, McFarlane RESIGNS in CalPERS, Apollo (Magic Johnson) Money Group Scandal (BIGGEST ZD CALL EVER!)

Wow! I remember when I was reviewing the Master Plan for Eli Broad's CRA/City Council/Board of Stupidvisor NIGHTMARE project, Grand Ave Project for LA Weekly over two years ago when I noticed some guy McFarlane was pushing pension money into this bogus project that I felt wasn't going to happen (which it hasn't) -- and saw McFarlane's company was pushing pension money in other shady Downtown real estate projects.

I blogged about it originally in this giant article about the Grand Ave Project (not the LA Weekly article)...AND, we have all heard Zuma Dogg go ON and ON and ON about pension money in shady and risky investments.

From ZD's Grand Ave Project Blog (Originally posted June 9, 2009)

I'm sure you will be reading much more about the overall details of the project (specifics of what it includes, business plan, comments from experts and community leaders, and the whole enchilada. Because how could you not? It's the biggest, most interspicably intertwined project in City, State or US History. Because you have the CRA, City Council, County -- AND, a private developer, Related Co. (working with CALPERS, the pension money people who fund MacFarlane, who work with Related Cos.) ALL coming together for this one massive project, that has part of the details, sort of worked out...and they'll figure out the rest as they go along. (A $2 billion dollar starting point of a "wink and a handshake" to allow everyone to start spending and making the money!)

AND SATURDAY WAS THE MOST TRIUMPHANT DAY IN MY THREE AND HALF YEARS OF INVESTIGATIVE BAMBOOZLE-BUSTING. Because that little old hunch that seemed shady to Zuma Dogg, so I started blasting about it on my blog and at Council until they finally pulled it out of Grand Ave Project, finally hit REUTERS as the guy I tripped over (Victor McFarlane) in that HUGE Grand Ave Project memo off Eli's desk RESIGNED. (I almost scrolled right past it in the massive memo that Zuma Dogg wasn't supposed to even have. Whew!)

LOS ANGELES (Reuters) – The real estate investment manager who led the California Public Employees' Retirement System, the nation's largest pension fund, into a money-losing land venture has resigned as an adviser to the fund, a spokeswoman for MacFarlane Partners said on Saturday.

Victor MacFarlane, chief executive of MacFarlane Partners, terminated his relationship with the $200 billion pension fund, spokeswoman Julie Chase said via email.

"I can confirm MacFarlane Partners, on its own initiative, resigned as manager of California Urban Investment Partners, LLC, for reasons agreed to and accepted by Calpers," Chase said.

California Urban Partners was set up in 1995 as an investment vehicle for Calpers, former basketball star Earvin "Magic" Johnson and MacFarlane to acquire and develop retail properties in urban markets in California, most with high concentrations of minority residents, a Calpers news release said.

MacFarlane Partners Inc is a real estate investment management firm in San Francisco that manages $10 billion in assets for some of the world's largest pension plans and institutions, according to its website.

The firm came under fire for a $970 million investment it managed for Calpers into LandSource Communities Development LLC, the Wall Street Journal reported on Saturday.

LandSource filed for bankruptcy in 2008, about 18 months after Calpers had bought into company, whose primary investment was a 15,000-acre (6100-hectare) tract of undeveloped land outside Los Angeles.

Calpers had invested in the development through its investment partner, MW Housing Partners, which was jointly managed by MacFarlane Housing and Weyerhaeuser Realty Investors, Calpers said in a 2008 press release said.

MW Housing held a 68 percent interest in LandSource, whose holdings were hit hard by the California real estate bust, it said.

The separation comes as Calpers examines its relationships with private equity firm Apollo Global Management and other outside money managers.

Calpers said earlier this month that its probe centers on around $50 million in payments that outside managers made over a five-year period to ARVCO Financial Ventures LLC, a firm headed by former Calpers board member Al Villalobos, to win the pension fund's business.

A Calpers representative could not be reached for comment on Saturday.

MORE FROM ZUMA DOGG'S ORIGINAL GRAND AVE PROJECT BLOG POST/DISCOVERY:

MacFarlane works with Related Co (the project developers) elsewhere in the city.
And if actually HAD any pension money to invest, I would put in a stipulation that none of it may be invested in this risky, speculative, un-necessary project, with only detail for one (of three phases) worked out, and no guarantee that the project has enough funding to even be completed. (And all kinds of loopholes that allow developers to "filp" the project to new operators, once any part (office, housing, retail) is completed -- AND allows developers to scale back on the number of affordable housing units required.

Why pension money is risky investment: The City is tied in to the success or failure of this project with the private developers (Related) for the term of the 99 year lease. If construction costs over-run, the City gets hit, if we can’t find someone to build the five star Mandarin Hotel (and there is concern that we may not find someone willing to build more luxury hotel accommodations in the area, the city takes a hit. (See Bonneventure) If retail revenues and occupancy rates do not generate to the levels promised, the city takes a hit (because what we gave was based on what we expected to take in).

What if the project never even gets completed?

From ZD's Grand Ave Project Blog (Originally posted June 9, 2009)

UPDATE: As of today, it still ain't happening...AT ALL!

AND HERE'S A ZD BLOG POST FROM SATURDAY THAT TIES INTO THIS IN A MAJOR WAY. I CAN'T BELIEVE I POSTED IT THE SAME DAY MCFARLANE RESIGNED!!! (I WENT ALL WEEKEND UNTIL JUST NOW, 5 AM MONDAY WITHOUT KNOWING!!! I COULD HAVE BEEN HAPPY ALL WEEKEND!

MORE NEWS HEADLINES

CalPERS Pensiongate Update: HOW AND THE HELL DOES ONE PERSON END UP WITH $53 MILLION OF STATE PENSION MONEY?: Did Zuma Dogg NOT Warn You About Apollo?

NOTE: New ZumaShow posted late last night on Trutanich vs AEG/Live. You can stream it now...see blue BlogTalkRadio widget on right side of this blog.

XXX

TODAY'S CalPERS STORY "SET-UP" (From Zuma Report/May 19, 2009): Earlier this year Mark Siffin was apparently forced out of office by his backers, the Apollo group out of New York but not before, however, pulling off quite a real estate coup in Los Angeles, billboard rights up the kazoo grandfathered into never never land. Who thinks about the children these days and what their minds are subjected to?

(Reporters can contact me for more on THAT inside story, or readers can call me if you want to hear about it. Not gonna type it all up now. Will maybe do a radio show on all of this. Remember "Wetherly Captial" era of my blogging this past Spring/May?)

Here's more on this in TODAY'S LA Times:

CalPERS reviewing tie with Apollo Management after steep losses

The California Public Employees' Retirement System is reviewing its relationship with private equity firm Apollo Management in the wake of steep losses on investments placed with the New York asset manager.

The review began in May and is focused on reducing administrative and management fees, said Pat Macht, a spokeswoman for the Sacramento agency known as CalPERS, which manages $200 billion in retirement assets -- the country's largest pension fund -- on behalf of current and former state and municipal employees.

Macht said the review, being conducted by Los Angeles consulting firm Houlihan Lokey, "has nothing to do" with a controversy that emerged last week when CalPERS disclosed that Apollo had paid about $46 million in fees to Alfred Villalobos, a former CalPERS board member who now works as an intermediary helping Apollo and other funds market their investment products to institutional investors such as CalPERS. [They SHOULD be saying, "Hell yeah, it has EVERYTHING to do with that.]

In all, Villalobos received almost $53 million in fees in seven years from Apollo and two other private equity firms that did business with CalPERS, the fund said. [THIS IS THE MOST SACRED OF ALL MONEY...PENSION MONEY...AND SOME CLOWN, VILLABOZO, GETS $53 MILLION OF IT??? I HOPE HIS WHOLE FAMILY SUFFERS AS MUCH AS THE PEOPLE WHOSE MONEY HE HAS.]

CalPERS has hired a Washington securities lawyer to conduct an internal probe of Villalobos' work as a so-called placement agent. [BRING SEVERAL PAIR OF HANDCUFFS.]

The reevaluation of Apollo being carried out by Houlihan Lokey is one of a number of reviews the pension agency is conducting of managers of its so-called alternative investments, which include real estate and hedge funds as well as private equity, Macht said.

"We're reevaluating relationships with everybody," she said.

CalPERS invests most of the assets it manages in publicly traded stocks and bonds. But it holds a significant amount of alternative investments, including $21 billion in private equity.

The pension agency has invested or committed to invest $4 billion with Apollo, which was founded by financier Leon Black. In 2007, CalPERS bought a 9% ownership stake in Apollo itself.

CalPERS continues to have "full confidence in Apollo," Macht said. "They are a good partner."

Reuters version of story.

SEMI-RELATED?:

And how fitting that this story is also in today's LA Times about Vivendi back when it was a water filtration company. Blogged about THAT over the Wetherly Capital era of ZD blogging. VERY BAD THINGS UNDER THE NOSE AND BLIND EYE OF GRAY DAVIS. We are dealing with some of the negative side effects today. DWP/WATER!

Former Vivendi execs Jean-Marie Messier, Edgar Bronfman Jr. ordered to stand trial

from L.A. Times - Business

Vivendi's former CEO Jean-Marie Messier and other former top executives including Edgar Bronfman Jr. have been ordered to stand trial, accused of misleading investors about the company's health while they were transforming the once-stodgy French water utility into a high-flying film, music and pay-TV giant.

Jerry Brown vs CNBC on PensionGate (California Pension Fraud)

Jerry Brown Doubles Down vs. CNBC

by: Robert Cruickshank

Wed Oct 21, 2009

Jerry Brown's appearance on CNBC yesterday to explain the state's lawsuit against State Street Bank turned into a battle between Brown, playing the role of a latter-day William Jennings Bryan in taking on the "Eastern financial elite," and the CNBC anchors who were very clearly playing their role as defenders of the Wall Street orthodoxy. Brown's combativeness earned him some favorable press.

Now Brown seems set to milk this for all it's worth, as he steps up his attack on CNBC at the Huffington Post:

If street thugs were to hold up a convenience store and drive off with $1 million, it would be national news. But when a venerable Boston bank rips off California's two largest pension funds for $56 million, it's business-as-usual -- at least to the anchors of CNBC....

But, in a commentary post today, CNBC anchor Michelle Caruso-Cabrera sneered at California's effort to recover $200 million in damages and penalties, using a made-up quote from Elliot Spitzer to call it "quaint."

This follows an interview Tuesday that was straight out of the Daily Show. CNBC invited me on to talk about the case, and then Caruso-Cabrera asked why I would come on the air to talk about it.

Her co-anchors seemed to have no problem with the rip-off ("as long as they quoted you a dollar and you paid the dollar, what do you care what they got it for") and questioned the integrity of the whistle-blowers ("that whistle-blower -- is that a private law firm that you guys have hired to do this for you?") Unbelievable. And for the record, the whistle-blowers are industry insiders who have yet to be named.

The tone and substance of the interview are symptomatic of the Eastern financial elite, who think that $200 million is small potatoes, and big business should be given the benefit of the doubt.

Jerry Brown has a knack for understanding which way the political winds blow, and ensuring he blows with them. Public anger at the Wall Street elite, which as Calitics alum David Dayen noted are now having British Lords explain that we all must "tolerate the inequality", is rising fast. It's smart politics to join the populist attack on Wall Street, and there's no fatter target than their apologists on CNBC, which is the Fox News of the financial world and has about as corrosive an effect on our discourse and politics as does Fox Noise.

It also helps Brown solidify the belief - mistaken, in my view - that he is an inherently progressive person. Today's Sacramento Bee carries an article looking back at Brown's days as a host for KPFA, Berkeley's legendary left-wing radio station, in the 1990s. Brown uttered some fairly progressive things at the time, including an attack on prisons.

Garry South seems to think these excerpts would hurt Brown, but I think they'll only help him. Brown's KPFA comments help reinforce the widespread notion among many Democrats that Brown is somehow a deeply progressive person - that the Jerry Brown of 1975 and of 1995 will be the Governor Brown of 2010.

Of course, as we know, the Jerry Brown of 2009 is not a supporter of prison reform (he strongly opposed Prop 5 last year and has joined Arnold Schwarzenegger in trying to remove federal oversight of state prison health care). He refuses to countenance tax increases, and has even called for new tax cuts.

Anything that distracts attention from those decidedly anti-progressive positions helps Brown maintain the support of progressive Dems who see him as someone who shares their values.

It certainly helps that Brown still is as media-savvy as anyone. So it makes perfect sense for Brown to continue to play the populist against the banks. It is very much the right thing to do from a policy perspective, and is only going to help his cause in the Democratic primary.

ZumaShow.com