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US Fidelis

State says US Fidelis founder owes $1.7 million in unpaid taxes, fees

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US Fidelis founders indicted in St. Charles County

The brothers who founded and ran US Fidelis, Darain (left) and Cory Atkinson (right), turn themselves in to authorities in St. Charles County on June 15, 2011, to face criminal charges related to alleged fraud in selling auto service contracts. Photo by David Carson,

US Fidelis founder Darain Atkinson owes about $1.7 million in state personal income tax, fees and interest, according to a tax lien filed by the Missouri Department of Revenue this month.

Atkinson and his younger brother, Cory, are accused in an indictment unsealed last month of consumer fraud, stealing and illegally selling insurance. Because Darain Atkinson is a convicted felon, he could face up to life in prison if convicted on the most serious counts.

The brothers own US Fidelis, the Wentzille company that once led the nation in the sale of extended auto-service contracts. It collapsed in late 2009 amid allegations of widespread consumer fraud, and eventually filed for bankruptcy.

An independent management team took over the company and last year sued the Atkinson brothers for stripping more than $101 million from the firm at the expense of creditors and hundreds of thousands of customers. To settle that suit, the Atkinsons surrendered virtually their entire fortunes, including grand houses and fleets of luxury cars and boats.

The settlement left each of the brothers' wives with $500,000 plus $75,000 in jewelry and household items. But the deal prohibited the women from turning those assets over to their husbands. The settlement did not seek the return to company coffers of more than $1 million in criminal-defense retainers paid by US Fidelis on the Atkinsons' behalf.

Darain Atkinson's wife, Mia, is not identified on the tax lien as a debtor, and it is unclear whether the state will seek to collect money she kept as part of the settlement.

According to a lien certificate filed in the St. Charles County courthouse on Tuesday, Darain Atkinson underpaid his state income tax by $1.3 million for the tax year 2009. He also is on the hook for an additional $379,236 in interest, penalties and other fees, according to the lien document. Interest will continue to accrue.

In Missouri, the tax rate is 6 percent on taxable income exceeding $9,000. That means Atkinson allegedly failed to pay state income tax on about $21.7 million in income.

Ted Farnen, a spokesman for the Missouri Department of Revenue, would not discuss details of the case. He did, however, describe what actions the state typically takes before a tax-collection case reaches this point.

"When a debt to the state has reached the point that a lien has been filed, this means the Department has already undertaken its traditional means of collection," Farnen said in an email. "A taxpayer is notified several times of a delinquency, and the taxpayer also has the right to appeal the assessment if he or she feels it is not correct."

Nathan Garrett, Darain Atkinson's criminal-defense lawyer, responded to a phone message and email seeking comment with a brief statement. "We are continuing to work through the myriad of issues before us, and this will be another one of those," Garrett said in an email. "We will continue to forge ahead, nonetheless."

The Internal Revenue Service has filed no lien against Darain Atkinson. An IRS spokesman in St. Louis refused to discuss Darain Atkinson's federal tax history, citing laws prohibiting the disclosure of such information.


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