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Darain Atkinson leaves federal courthouse

Darain Atkinson (left) leaves the Thomas F. Eagleton U.S. Courthouse in downtown St. Louis on Monday, April 9, 2012, with his attorney, Scott Rosenblum. Photo by Erik M. Lunsford, elunsford@post-dispatch.com

ST. CHARLES COUNTY • Darain Atkinson, the co-founder and former president of US Fidelis, was sentenced to eight years in prison Monday on state charges.

The action by Circuit Judge Jon Cunningham followed Atkinson's sentencing last week to eight years on federal charges. He also was ordered to pay $4.5 million in back taxes in that case.

Both the federal and state sentences will run concurrently. In the state case, Atkinson had previously pleaded guilty to stealing, insurance fraud and deceptive business practices.

Cunningham told Atkinson he had spent Sunday evening reading victim's impact statements and was surprised by how deeply Atkinson's crimes had affected them.

“Some of these people were retired or disabled,” he said. “They talked about their economic situations and how the one thing they needed was a car that would run.”

When these people didn't get the insurance they needed, it was devastating for them, Cunningham said.

“The word that came up time after time was that they felt humiliated by it,” he said. “Your bad actions, your greed caused all of this difficulty.”

The Wentzville-based US Fidelis, formerly known as National Auto Warranty Services, collapsed in 2009 amid fraud accusations. Atkinson and his company co-founder and brother, Cory Atkinson, were accused of bleeding the firm of more than $100 million.

In July, a federal judge approved a bankruptcy settlement in which customers and creditors will split $26.5 million.

Officials said Fidelis used deceptive marketing to mislead customers into thinking they were talking to auto dealers or manufacturers and were getting a more comprehensive warranty than they were.

Darain Atkinson, 47, of St. Louis, was represented by attorney Gilbert C. Sison. Atkinson didn't make a statement in court, but after the hearing, he said he was very sorry and that he took responsibility for U.S. Fidelis.

“Talent will get you to the top, but character will keep you there,” he said.

Cory Atkinson, 42, of Chesterfield, pleaded guilty in June to federal and state charges. He was sentenced Sept. 18 to 40 months in federal prison for conspiracy and tax fraud, and ordered to pay $4.49 million in back taxes. Atkinson was sentenced Friday to four years in prison on state fraud and stealing charges.

Attorney General Chris Koster, whose office prosecuted the Atkinson brothers, said in 2009, his office received more complaints about service contract sellers than about any other industry, but since then there has been a marked decrease.

 In addition to the criminal charges against the Atkinsons, the Attorney General’s Office filed civil lawsuits against auto service contract telemarketers and formed a task force to recommend new requirements in the industry. That task force recommended new legislation, which passed in 2011, and strengthened consumer protections in the industry.

The Attorney General’s Office has entered into nine settlements with service contract marketers and continues to litigate with five others.