Aon Center | By Ken Lund from Reno, Nevada, USA (Aon Center, Chicago, Illinois) [CC BY-SA 2.0 (], via Wikimedia Commons

A federal judge has refused to let the former CEO of a South American Aon subsidiary end a $20 million federal lawsuit he faces in Chicago, in which he is accused of funneling company funds.

On June 5, 2015, Aon Corporation sued Jose Luis Contreras Cabezas, the former chief executive officer, general manager and board chairman of subsidiaries Aon Bolivia and Aon Re Bolivia, alleging he sent Aon funds to a shell company, Grupcor S.R.L., which he owned with Aon Bolivia’s former chief operating officer, Gonzalo Luis Romero Benavente. The men were the only two shareholders in Grupcor.

According to Aon, Cabezas cost the company more than $20 million and led to it being unable to do any business in Bolivia. Cabezas moved to dismiss the complaint, saying the matter should be litigated in Bolivia as a matter of convenience, that the Chicago court lacks personal jurisdiction over him and that Aon lacks prudential standing, so any claims should come from the subsidiaries.

In an opinion issued March 7, U.S. District Judge Andrea R. Wood denied Cabezas’ motion to dismiss the complaint accusing Cabezas of using more than $700,000 in Aon Bolivia funds to buy a building in Grupcor’s name, then leasing space in the building to Aon Bolivia. In addition to collecting rent in that building, Grupcor spent nearly $1.5 million in Aon funds to buy office and parking spaces in the city of Santa Cruz de la Sierra, which it then leased to Aon Bolivia, according to the complaint. Aon also said Cabezas misappropriated additional funds to make payments to himself, including depositing more than $275,000 in a U.S. ETrade account in his name.

In assessing the issue of convenience, Wood said Cabezas was right to raise concerns about the court’s ability to compel the appearance of as many as nine Bolivian residents he called key defense witnesses, none of whom still work for the subsidiaries. However, she found similar arguments about Bolivian documents written in Spanish unpersuasive, and said public interest factors favor retaining the matter in Chicago, as the nature of the claim is to consider possible redress to an Illinois corporation.

“The tortious conduct that Aon alleges is conduct specifically directed to Aon in Illinois as the parent company,” Wood wrote. She agreed the company satisfied the requirement to establish the court’s jurisdiction over Cabezas in the matter, despite his insistence that the fact the alleged crimes occurred in Bolivia and that communications with Aon in Illinois alone should not suffice.

With respect to the prudential standing argument, Wood said the issue is whether Aon’s claims are direct, such that it was injured, or derivative, in which case a shareholder can only sue on behalf of a subsidiary to make sure any damages awarded to the subsidiary are available to its creditors.

“It is clear that Aon’s complaint alleges direct fraud and breach of fiduciary duty claims against (Cabezas),” Wood wrote. “With respect to both claims, Aon has alleged injury unique to Aon as the parent company and separate from the harm to the Bolivian Companies, including the costs to Aon of the investigation and audit and the cost to Aon of losing the ability to conduct reinsurance business in Bolivia.”

Among the original allegations are “fraudulent misrepresentation and omissions made directly to Aon” Wood added, thus giving it standing to pursue the claim directly. She further said Aon’s interpretation of Delaware law is accurate in that it alleged Cabezas “owed fiduciary duties directly to it as the parent company of the wholly-owned Bolivian Companies.”

Aon is being represented by attorneys Holly A. Harrison and Patrick E. Croke of Sidley Austin LLP.

Cabezas is represented by attorneys Nicole N. Auerbach, Margot Klein and Henry E. Turner, of the Valorem Law Group LLC, of Chicago.

Want to get notified whenever we write about any of these organizations ?
Next time we write about any of these organizations, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

AON PLC Sidley Austin LLP U.S. District Court for the Northern District of Illinois Valorem Law Group

More News