Villalobos' attorneys drop him for not paying legal fees
A judge has tentatively approved a request by lawyers for former state pension fund official Alfred J.R. Villalobos to drop their client over unpaid legal bills.
The Cooley law firm in Palo Alto sought to be relieved from defending Villalobos in a state fraud lawsuit because Villalobos owes $3.5 million in legal fees and is unable to "pay for the fees going forward," Los Angeles Superior Court Judge John H. Reid ruled Wednesday in a tentative decision.
Villalobos' lawyers declined to comment on the judge's ruling. Villalobos could not be reached. However, in legal papers, Villalobos unsuccessfully argued that Cooley should not be relieved from representing him until a U.S. Bankruptcy Court in Reno, Nev., approves his hiring of new counsel.
"If this court grants Mr. Villalobos' request, it is likely that Cooley LLP will be forced to perform further work on behalf of Defendants without compensation," the judge ruled, denying Villalobos' request.
Villalobos, a former board member of the California Public Employees' Retirement System and vice mayor of Los Angeles, is being sued by the California attorney general's office on allegations he plied pension fund officials with luxury trips and gifts to influence investment decisions.
Villalobos and his firm, Arvco Capital Research of Stateline, Nev., earned more than $40 million in allegedly illegal commissions from helping private investment managers win $4.8 billion worth of deals from 2005 to 2009.
The lawsuit, filed May 5, 2010, alleges that Villalobos illegally sold securities without a broker-dealer license. It also alleges that Villalobos and a co-defendant, former CalPERS Chief Executive Federico Buenrostro Jr., violated state unfair competition laws.
Both men have denied the charges. Villalobos contended that he acted only as a "finder" and did not sell securities.
A hearing is set on the legal representation issue for 9 a.m. Thursday at Los Angeles County Superior Court in Santa Monica.
The hearing will also air arguments on an attorney general's motion asking the judge to issue a summary judgment finding that Villalobos and Arvco sold securities without a license. On Wednesday, Reid tentatively denied the motion.
No trial date has been set for the lawsuit against Villalobos and Arvco. Buenrostro, however, is scheduled for trial May 7.
-- Marc Lifsher
Photo: Alfred J.R. Villalobos outside the Santa Monica courthouse after a hearing May 28, 2010. Credit: Allen J. Schaben / Los Angeles Times