Mo. grand jury indicts former US Fidelis owners

KANSAS CITY, Mo. (AP) — The brothers who formerly owned one of the nation's top marketers of auto service contracts were indicted Wednesday on charges that include stealing, unlawful merchandising practices and insurance fraud.

Missouri Attorney General Chris Koster announced a 14-count indictment handed up by a St. Charles County grand jury against Darain Atkinson and a 13-count indictment against Cory Atkinson. The men owned US Fidelis in Wentzville, Mo., a suburb of St. Louis. The company collapsed in 2009 amid consumer fraud allegations and filed for bankruptcy in March 2010.

An attorney for the Atkinsons did not return messages seeking comment. The Atkinsons do not have listed phone numbers.

Koster said it isn't yet clear how many consumers were allegedly defrauded by US Fidelis, "but we believe it is a large number and look forward to the opportunity to present the full array of evidence in court."

The indictments allege that the men kept refunds due to consumers, charged fees exceeding the contract amounts and misled consumers about refunds. The Atkinsons are also accused of misleading consumers into believing the company was affiliated with automakers and dealers; wrongly convincing people their auto warranties were expired or were about to expire; and misleading them into thinking their purchase would extend or reinstate the manufacturer's warranty.

Koster said both men are previous offenders. Darain Atkinson was convicted in 1986 in Kansas for theft, forgery and burglary, and in 1987 in federal court in Kansas for manufacturing counterfeit Federal Reserve notes. Cory Atkinson was convicted of felony criminal trespass in 1997 in Colorado.

Darain Atkinson, because he is deemed a prior and persistent felon, could face up to life in prison if convicted. Cory Atkinson could face up to 15 years in prison.

US Fidelis was formerly known as National Auto Warranty Services and did business under the name "Dealer Services." The company sold more than 400,000 service contracts.

Last year, US Fidelis reached a settlement with 11 states that barred them from telemarketing or selling in those states: Arkansas, Idaho, Iowa, Kansas, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington and Wisconsin.

US Fidelis also sued the brothers, accusing them of stripping the company of at least $101 million through high salaries, cash distributions and company spending that kept them living in luxury.

In October, a federal bankruptcy judge in St. Louis approved a settlement calling for the Atkinsons to pay about $10.5 million and surrender possibly $10 million more in assets.

Koster, whose office will prosecute the case, said his office has been involved in nearly a dozen civil cases against other firms in the auto service contract industry.

"The office continues to have a high level of interest in bringing fairness and honesty back to this industry," he said.

A St. Charles County court clerk said bond has not yet been set for the Atkinsons.

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