December 13, 2013
Jefferson City, Mo. – Attorney General Chris Koster announced that approximately 19,000 consumers nationwide, including 473 in Missouri, will begin receiving nearly $10 million in total restitution payments in connection with the US Fidelis bankruptcy litigation. Restitution payments to Missourians total $243,373.14, and will begin being issued tomorrow.
"Fighting fraud in the auto service contract industry has been a priority of my office," said Koster. "That is why we led the effort to ensure that a substantial portion of the assets of US Fidelis would go to consumers who had been cheated by the company."
In March 2008, Missouri became the first state in the country to sue US Fidelis for violating Missouri's consumer protection laws. US Fidelis, a Wentzville-based auto service contract seller, sent misleading solicitations telling consumers their auto warranties had expired or would soon expire and that they were being contacted by an entity affiliated with their original vehicle warranty to extend their service coverage. Consumers were also routinely misled into believing that the contracts they were buying covered far more repairs than they actually covered. Missouri's lawsuit included allegations of deceptive mailings, misleading sales calls, illegal telemarketing, millions of illegal robo-calls, and misleading TV ads. Eleven other states filed similar suits in April 2010.
After US Fidelis filed for bankruptcy protection in June 2010 in the U.S. Bankruptcy Court for the Eastern District of Missouri, Koster obtained criminal indictments against the company's owners, Darain and Cory Atkinson, for their role in the consumer fraud. They eventually pleaded guilty, with Darain receiving an eight-year prison sentence and Cory receiving a four-year sentence, both in 2012.
Since 2010, a multi-state steering committee led by the Missouri Attorney General's office has been working with US Fidelis, its creditors, and others involved in the bankruptcy litigation to represent the consumer victims of the company's fraud. Koster said Missouri's goal was to ensure the establishment of a consumer restitution fund, paid for with the liquidated assets of the company and the lavish personal assets of the Atkinson brothers.
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. Eleven former US Fidelis managers agreed to return $92,110.72 for the consumer restitution fund.
In August of 2012, the bankruptcy court approved the final settlement, which included the approximately $10 million restitution fund. The fund is overseen by representatives from Missouri, Ohio, Texas, and Washington and administered by Garden City Group out of Dublin, Ohio.
Approximately 19,000 consumers have filed valid claims. Those who requested a refund of their contract will receive payment based on the length of their contract and the amount they paid for it. Consumers with "money-back guarantee" refund claims will receive $350 each, and consumers with misrepresentation or telemarketing claims will receive $250 each.
In addition to the restitution checks being mailed this week, some consumers have already received restitution payments from a separate $3 million total fund from companies that worked with US Fidelis.
Consumers who have outstanding claims against US Fidelis, who have questions about their claims, or whose contact information may have changed should contact Garden City Group at www.usfbankruptcy.com or toll free at (877) 691-8477.