Cory Atkinson, a former co-owner of the Wentzville-based US Fidelis, pleaded guilty in U.S. district court today to criminal charges involving consumer fraud and lying on a federal tax return.
Atkinson, 42, pleaded guilty on Thursday to related state charges. Today, he entered a guilty plea agreement in the federal case that can be withdrawn if U.S. District Court Judge Catherine Perry believes he should serve a prison sentence longer than 36 to 40 months, a proposed sentence approved by Atkinson and federal prosecutors.
If Perry approves the deal, Atkinson is expected to be sentenced to no more than a total of four years in prison on both the state and federal charges.
Atkinson pleaded guilty to conspiracy to commit mail and wire fraud and filing a false tax return for the 2006 tax year. As part of the plea deal, prosecutors dropped an additional charge of filing a false return for the 2007 tax year.
His brother, former company president Darain Atkinson, 47, also has pleaded guilty to state and federal charges and he is expected to be sentenced to eight years in prison next month.
US Fidelis, once the nation's top seller of vehicle service contracts, collapsed in late 2009. Consumer advocates and government regulators accused the company of lying to consumers in order to sell auto protection plans riddled with fine-print exceptions and limitations.
When US Fidelis filed for bankruptcy, the Atkinson brothers turned over the company to an independent management team. Months later, that team sued the brothers for allegedly pilfering more than $100 million from the firm.
To settle that suit, the brothers surrendered virtually all their assets to the company, including fleets of luxury cars and boats and houses in St. Charles County, the Cayman Islands and near Lake Tahoe.
Company records indicate that US Fidelis paid Cory Atkinson more than $14 million in 2006, but his return filed for that year claimed he owed no taxes.
In a statement released after the guilty plea, the Internal Revenue Service Special Agent in Charge Stephen Boyd said the IRS "is committed to investigating individuals who use their corporations as personal piggy banks."