Missouri-based US Fidelis, which until recently claimed to be the nation’s top marketer of vehicle service contracts, has filed for bankruptcy amid allegations that its owners used company money to finance their lavish lifestyles.
In a court filing, the company said the brothers who own it, Darain and Cory Atkinson, and their real estate companies owe the firm more than $65 million, the St. Louis Post-Dispatch reported.
US Fidelis once employed more than 1,000 people at a call center in Wentzville, Mo., where the company is based. The newspaper reported that at least 600 of the employees were laid off late last year. A company statement said it now has 109 workers to assist existing customers.
The bankruptcy filing said the Atkinson brothers used company money to maintain lavish lifestyles for themselves and their families.
US Fidelis has liabilities of $25.8 million. It has $74.4 million in assets, but nearly 90 percent of the assets are debts owed to the firm by the two brothers and affiliated real estate companies.
US Fidelis will not use Chapter 11 bankruptcy protection to restructure the company in order to resume selling the service contracts, spokesman Ken Fields said. He didn’t know if the Atkinson brothers intended to repay money they owe to the company.
No criminal charges have been filed against the company or the Atkinson brothers. Attempts to reach the Atkinsons for comment were unsuccessful. Neither had a listed phone number, and Fields said he is not representing them and could not comment on their behalf.
The Post-Dispatch said Chicago-based Mepco Finance Corp., which financed most of the auto service contracts sold by US Fidelis, appears to be the biggest creditor, with a $14.5 million claim against the company. Mepco also owns the call center after acquiring it at a January foreclosure auction.
The bankruptcy filing identifies about 1,500 other creditors, including US Fidelis customers who are owed cancellation refunds.
Among the more recognizable creditors are a Kansas City law firm started by former U.S. Attorney General John Ashcroft, which is owed $668,599; and NASCAR team Rusty Wallace Racing, which was hired to promote US Fidelis and is owed $535,439.
US Fidelis said the bankruptcy does not affect the coverage of service contracts it sold. Claims on these contracts are administrated by independent companies.
Darain Atkinson founded US Fidelis in 2001, a little more than a decade after he got out of prison following convictions for theft, burglary, counterfeiting and check forging. The firm grew in part from high-pressure telephone sales tactics and had gross revenue of $264.5 million last year.
But questions arose after investigations by several states, the Better Business Bureau and the Post-Dispatch.
The filing said Darain Atkinson, US Fidelis’ 45-year-old president, owes the company $28.2 million. Cory Atkinson, its 40-year-old vice president, owes $20.5 million.
The Post-Dispatch said the company paid the mortgage, utilities and landscaping costs for Darain Atkinson’s mansion in the Cayman Islands, as well as several hundred thousand dollars to contractors during the period when Darain Atkinson’s $17 million Lake Saint Louis home was under construction.
The company paid $445,283 to a home furnisher in the Lake Tahoe, Calif., resort community where Cory Atkinson owns a home he bought in 2008 for $2.9 million.
Was this article valuable?
Here are more articles you may enjoy.