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Federal authorities charge ex-US Fidelis owners

Federal authorities charge ex-US Fidelis owners

April 6th, 2012 in News

ST. CHARLES, Mo. (AP) - Federal charges were revealed Thursday against the former owners of one of the nation's biggest marketers of auto service contracts, just hours after one of the men pleaded guilty to Missouri charges of theft and fraud.

The federal indictment unsealed in St. Louis charges brothers Darain and Cory Atkinson with one count of conspiracy and two counts of filing false tax returns. The men owned Wentzville-based US Fidelis, which collapsed in 2009 amid allegations of consumer fraud. The company filed for bankruptcy in March 2010.

Federal prosecutors say the brothers are accused of using company funds for personal expenses such as luxury vehicles and million-dollar homes in suburban St. Louis, Lake Tahoe and the Cayman Islands. Authorities say the brothers received more than $71 million from the business and its predecessor from 2006 to 2008.

Earlier Thursday, Darain Atkinson pleaded guilty in St. Charles County Circuit Court to state charges of fraud and stealing consumer refunds. The Missouri attorney general's office said he faces eight years in prison when sentenced July 16. A trial is scheduled Sept. 4 in state court for Cory Atkinson.

The St. Louis Post-Dispatch reports ( that an attorney for Darain Atkinson said the federal case would be resolved before then and that the state charges were unlikely to lead to any additional prison time.

"He's done everything he can, not only to accept his responsibility, he's surrendered everything he's owned to make things good," attorney Scott Rosenblum said.

US Fidelis had been called National Auto Warranty Services and operated under the name "Dealer Services." It sold more than 400,000 service contracts.

The company previously reached a settlement with 11 states to bar telemarketing or selling in Arkansas, Idaho, Iowa, Kansas, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington and Wisconsin.