The co-founders of defunct St. Louis-area auto service contract seller, US Fidelis, has been sentenced to prison on charges of stealing consumers’ refunds, insurance fraud and consumer fraud.
Missouri Attorney General Chris Koster announced that Darain Atkinson was sentenced to eight years in prison on Oct. 1. He pleaded guilty to the charges in April.
Darain Atkinson’s brother, Cory, a co-owner of US Fidelis, was sentenced on Sept. 28 to four years on similar charges.
US Fidelis was based in Wentzville, Mo.
Cory Atkinson was also sentenced to 40 months in prison on federal charges of tax fraud conspiracy and tax fraud. Atkinson pleaded guilty earlier, and also has to pay about $4.5 million in back taxes in the federal case, the Associated Press reported.
Prosecutors say the Atkinsons used company funds for personal expenses.
“In 2009, my office received more complaints about service contract sellers than about any other industry. The industry was plagued by deceptive practices and half truths,” Koster said. “My office’s prosecution of the owners of US Fidelis set in motion a dramatic change in that industry – a transformation reflected in the considerable decrease in complaints my office received about service contract sellers last year. The criminal prosecutions of Darain and Cory Atkinson should serve as a powerful reminder that my office will not tolerate unfair and deceptive business practices.”
In addition to the criminal charges against the Atkinsons, the Attorney General’s Office filed civil lawsuits against auto service contract telemarketers and formed a task force to recommend new requirements in the industry. That task force recommended new legislation, which passed in 2011, and strengthened consumer protections in the industry. The Attorney General’s Office has entered into 9 settlements with service contract marketers and continues to litigate with five others.