US Fidelis Co-Owner Pleads Guilty

The co-owner of a now-defunct but once prominent marketer of auto service contracts pleaded guilty Thursday to misleading consumers, insurance fraud and stealing, Missouri Attorney General Chris Koster said.

Cory Atkinson of Lake St. Louis, Mo., and his brother, Darain Atkinson, operated US Fidelis. The Wentzville, Mo.-based company was once among the nation’s largest marketers of auto service contracts.

Cory Atkinson will be sentenced Sept. 28 following the plea in St. Charles Circuit Court. He is scheduled to appear Monday in U.S. District Court, where he faces federal charges, but it wasn’t clear if he would plead guilty to those charges as well.

Koster is recommending a four-year prison term.

Darain Atkinson pleaded guilty in April and faces sentencing July 16.

Koster said US Fidelis misled consumers about what was covered by warranties, lied about being affiliated with automakers and dealers and used deceptive practices.

“He has accepted responsibility for his actions in this case and he decided it was in the best interest of his family and himself to act in this manner,” said William Margulis, Cory Atkinson’s attorney.

US Fidelis had been called National Auto Warranty Services and operated under the name “Dealer Services.” It sold more than 400,000 service contracts before collapsing in 2009 amid allegations of consumer fraud. The company filed for bankruptcy in March 2010.

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

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

The Atkinson brothers were indicted by a St. Charles County grand jury in June 2011.