Clear Blue Insurance sues Aon for alleged fraud
The lawsuit alleges Aon “wrongfully” used its unified platform to lure clients and reap huge profits.
Clear Blue Insurance is suing global broking giant Aon over accusations of fraud, alleging in a new lawsuit that Aon eschewed standard marked practice and plunged the insurance company into “a global, multibillion-dollar insurance and reinsurance scandal with hundreds of millions of dollars of insurance and reinsurance premium now presumed to be unrecoverable.”
The Manhattan Supreme Court suit, filed Thursday, alleges that Aon “wrongfully” used its unified platform to lure clients and reap huge profits, while allowing the company’s subsidiaries to violate Bermuda licenses, breach contracts, act recklessly, and generally expose their clients to substantial risk and losses.
The suit alleges misconduct by now-bankrupt Israeli artificial intelligence startup Vesttoo, a former partner of Aon. Vesttoo is currently enmeshed in legal action following the discovery of phony letters of credit (LOC) on its platform.
The complaint alleges that Aon and its subsidiaries had staff and the power to “stop the Vesttoo fraud dead in its tracks,” but instead acted with “willful blindness” by failing to audit the Vesttoo LOC’s as promised and failing to ensure regulatory compliance.
“Aon conducted no diligence or Know Your Customer or other Anti-Money Laundering analysis into the bona fides of Vesttoo,” the suit states. “By embracing it and hosting Vesttoo on Aon’s Bermuda-based White Rock segregated cell platform, Aon instantly wrapped Vesttoo with the extremely valuable imprimatur of global credibility thereby facilitating and enabling one of the most mendacious, colossal, and broad-reaching frauds since Charles Ponzi and, more recently, Bernie Madoff, burst onto the scene.”
Plaintiffs Clear Blue Insurance and affiliated companies are represented by Elliott Kroll, James Hulme and Huhnsik Chung of ArentFox Schiff.
Aon subsidiary White Rock Group has since claimed in a petition for injunctive relief against Vesttoo filed in the Southern District of New York that it was simply a “middleman” looking to protect its own clients, but Clear Blue disputes that account.
“In reality, Aon, through its affiliates, White Rock Group and Aon Insurance Managers, exercised absolutely and complete control and domination of the entire Bermuda-based operations that facilitated the Vesttoo fraud,” the lawsuit states. “Aon had absolute and unfettered discretion in the operation of the Vesttoo Cells at White Rock.”
Clear Blue’s total LOC exposure is at minimum $362.3 million, the suit says—none of which is collateralized because the LOCs are fraudulent.
The suit seeks to indemnify Clear Blue from any future obligations, and to find Aon liable for acting as the “alter ego of Vesttoo through White Rock by its use of uncollateralized Cells.”
The complaint alleges constructive fraud, breach of contract, negligent misrepresentation, aiding and abetting, negligence, promissory estoppel, unjust enrichment, and common law indemnity.
Counsel has not yet appeared for Aon. Representatives of the company did not immediately return a request for comment.
Read the complaint:
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