ST. CHARLES, Missouri—A former co-owner of one of the country’s top marketers of auto service contracts has pleaded guilty in Missouri to theft and fraud.
Darain Atkinson founded St. Charles-based US Fidelis with his brother, Cory Atkinson. Missouri Attorney General Chris Koster says Darain Atkinson pleaded guilty Thursday to one count each of consumer fraud, insurance fraud and stealing consumer refunds.
Sentencing in St. Charles County Circuit Court is scheduled for July 16. Prosecutors are recommending a sentence of eight years.
“We’ve put a great deal of civil and criminal pressure on these various companies and today’s eight-year prison term sends a message to everyone who is in this insurance space that the rules are going to be enforced and we take them very seriously,” said Koster.
Koster said one of the most offensive parts of the case was the stealing nature of the case.
“When a consumer cancelled their contract, they were due a refund. And this company said ‘we’re going to take 40 percent off the amount of money that we owe them as part of that refund,’” said Koster. “So they’d send back the consumer 60 percent and pocket 40 percent and that is stealing under the laws of the state of Missouri. Plain and simple.”
A grand jury in St. Charles County last year indicted Darain Atkinson on 14 counts and his brother on 13 counts. Cory Atkinson faces trial Sept. 4.
US Fidelis collapsed in 2009 amid consumer fraud allegations and filed for bankruptcy in March 2010.
But Koster says criminals like the Atkinsons are still out there.
“I have said on numerous occasions that the extended automobile warranty industry is a dangerous market, that if my mother received a telephone call from one of these guys that I would not want her buying these products absent thorough investigation,” said Koster.
The Associated Press contributed to this report.