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.

California Investment