US Fidelis founder pleads guilty again

AP News
Posted: Apr 09, 2012 4:31 PM
US Fidelis founder pleads guilty again

A former owner of what was once among the nation's largest marketers of auto service contracts pleaded guilty Monday to federal charges, marking his second guilty plea in four days.

Darain Atkinson, 47, pleaded guilty to conspiracy to commit mail and wire fraud, and filing false tax returns. Sentencing is July 12.

The federal charges against Atkinson and his brother Cory Atkinson were announced Thursday, the same day Darain Atkinson pleaded guilty to state theft and fraud charges. Sentencing on the state charges is July 16.

Darain and Cory Atkinson were co-founders of US Fidelis, which collapsed in 2009 amid allegations of consumer fraud. The company filed for bankruptcy in March 2010.

Cory Atkinson faces the same state and federal charges as his brother. His state case is scheduled to go to trial on Sept. 4. A trial date on the federal charges has not been set. Court records do not show an attorney for his federal case and he does not have a listed phone number.

Federal prosecutors accused the brothers 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.

US Fidelis had been called National Auto Warranty Services and operated under the name "Dealer Services." It sold more than 400,000 service contracts. Federal prosecutors say the firm used false, deceptive and misleading sales and marketing techniques.

Federal prosecutors say Darain Atkinson also directed employees to fraudulently withhold substantial portions of refunds due to customers who canceled vehicle service contracts and were owned a full or prorated refund.

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.