One of the two brothers who owned and operated U.S. Fidelis, a direct marketer that sold automotive extended-service contracts directly to consumers, pleaded guilty last week to felony stealing, insurance fraud and other consumer-protection violations, according to the Missouri attorney general's office.
Fidelis co-owner pleads guilty to stealing, fraud
Darain Atkinson, 47, faces up to eight years in prison at a sentencing hearing on July 16, prosecutors said. Cory Atkinson, 42, is scheduled for trial on Sept. 4.
According to prosecutors, Darain Atkinson admitted to:
- Keeping refunds owed to consumers.
- Misleading consumers about the extent of coverage.
- Using deceptive practices to intentionally avoid state laws related to insurance or service contracts.
- Leading consumers to believe the company was affiliated with auto manufacturers and dealers when it was not.
U.S. Fidelis, of Wentzville, Mo., declared bankruptcy in 2010. While it lasted, the company had a high-profile nationwide ad campaign that included a NASCAR sponsorship and TV spots that promised to undercut service contracts sold by dealerships.
The company inspired so many copycats that Missouri became the "Silicon Valley for auto service contract scams," according to Chris Koster, Missouri's attorney general.
The company's bankruptcy, along with thousands of complaints about U.S. Fidelis and other direct marketers, provoked the state to create a task force to rewrite the laws governing service contracts for companies doing business in Missouri. Several other states also joined lawsuits against U.S. Fidelis.
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