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Attorney General's News Release

July 19, 2012

Attorney General Koster, 11 states settle with US Fidelis -- secures $14.1 million in consumer restitution --

Jefferson City, Mo. – Attorney General Chris Koster and 11 other state attorneys general today announced an agreement with US Fidelis, Inc., the defunct marketer of vehicle service contracts, which paves the way for the creation of a $14.1 million consumer restitution fund. The agreement also provides injunctive relief.

“When I realized the scope of the fraud US Fidelis was perpetrating on consumers across the country, I made stopping it, punishing it, and deterring any future conduct a major priority in my office,” Koster said. “I am pleased that, in addition to sending the owners of the company to prison, we are now able to return some of US Fidelis’s ill-gotten gains back to consumers.”

US Fidelis filed for bankruptcy protection in 2010 after being accused by Koster and others of routinely misleading consumers. Missouri indicted the company’s owners, Darain and Cory Atkinson, in June 2010. Both have pleaded guilty to criminal violations and are set to be sentenced later this year.

In March 2008, Missouri became the first state to sue US Fidelis. Missouri’s lawsuit was amended twice to include allegations of deceptive mailings, misleading sales calls, illegal telemarketing, millions of illegal robo-calls, and misleading TV ads.

In March 2010, after US Fidelis filed for bankruptcy protection, the Attorney General’s Office filed for the appointment of a trustee to manage the company. Eleven states joined in that motion, which was ultimately settled in exchange for various provisions that ensured that the Atkinsons would not be involved in the management of US Fidelis in the future.

Eleven other states filed suit in April 2010. The lawsuits alleged that US Fidelis’s solicitations misled consumers into believing their auto warranties had expired or would soon expire and that they were being contacted by a manufacturer or other entity affiliated with their original vehicle warranty. Consumers were also routinely misled into believing that the contracts they were buying covered far more repairs than they actually covered.

In November 2010, the bankruptcy court approved a settlement in which the Atkinson brothers agreed to turn over substantially all of their assets to the bankruptcy estate.

Since 2010, the multi-state steering committee– including Missouri, Ohio, Texas, and Washington – has been working with US Fidelis, its creditors, and others involved in the bankruptcy case to reach an all-encompassing settlement that would account for all consumer claims.

That settlement, announced today, along with a settlement with Warrantech Corporation, whose contracts US Fidelis sold, establishes a $14.1 million Consumer Restitution Fund to provide compensation to eligible consumers who submit a valid proof of claim with the bankruptcy court. To be considered for restitution, most consumers must file a proof of claim by October 5, 2012. Consumers whose contracts expire after this deadline have additional time.

Missouri also negotiated with a number of former employees to return their share of funds they were to receive under Worker Adjustment and Retraining Notification Act claims. Six former sales managers and the chief marketing officer have agreed to return $55,116.82 to the consumer fund. The settlements also have netted an additional $7,430.30 that will be distributed to Missouri consumers.

The Attorney General’s Office has also filed a lawsuit in St. Charles Circuit Court against two sales managers, a general sales manager who trained most of the sales people, and the general manager to try to recover additional money for consumers.

For additional information about filing a proof of claim, consumers should visit the US Fidelis bankruptcy website at Consumers may also call toll-free 1-877-691-8477 with any additional questions.

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