U.S. Fidelis co-founders get prison terms for service-contract fraud

The two brothers who founded U.S. Fidelis Inc. received prison terms and were ordered to pay more than $4 million apiece in restitution stemming from their defunct company's aggressive marketing of bogus extended-service contracts directly to consumers.

The Wentzville, Mo., company went out of business in 2010.

The case potentially hurts providers of legitimate service contracts sold through auto dealerships, said the Service Contract Industry Council, a trade group headquartered in Tallahassee, Fla., for extended-service contract providers.

Darain Atkinson, 47, and Cory Atkinson, 42, had pleaded guilty to state and federal charges including stealing and fraud.

Last week, Darain, the former president, was sentenced to eight years in prison on state charges. In September, he was sentenced to eight years in prison and ordered to pay more than $4 million in restitution on federal charges. Cory, co-founder and co-owner, was sentenced Sept. 28 to four years in prison on state charges. Earlier last month, he was sentenced to 40 months and ordered to pay more than $4 million in restitution on federal charges. The brothers are serving the state and federal sentences concurrently.

Under federal sentencing guidelines, the Atkinsons likely will have to serve nearly all of their sentences before becoming eligible for parole, according to Doug Ommen, chief of the state attorney general's consumer protection division.

The case had nationwide reach. Besides federal authorities, at least 42 state attorneys general joined in an investigation of U.S. Fidelis, according to the Missouri attorney general.

Because of the company's fast-talking marketing practices, consumers often bought extended-service contracts from U.S. Fidelis without understanding what they were buying, what was covered or how to get a refund.

Last year, Missouri passed laws to enforce better disclosures and timely refunds.