Auto warranty company owners forfeit mansion, yacht

U.S. Fidelis NascarTwo brothers who ran the top auto warranty company in the country were told to fork over a mansion, a 50-foot yacht and 14 motorcycles as partial compensation for scamming more than 400,000 customers in 11 states with phony contracts.

U.S. Fidelis, which operated as National Auto Warranty Service, was a primary NASCAR sponsor and the nation's top auto warranty seller before it went bankrupt last March. The company used robocalls and TV ads to make customers believe they were purchasing a warranty covering all major repairs and "bumper to bumper" coverage.
Instead, the Missouri-based company's founders, brothers Darain and Cory Atkinson, are accused of taking $101 million in corporate assets for their personal gain. The Better Business Bureau alone received more than 1,400 complaints about the company.

"Only a vehicle manufacturer can provide an extended warranty," Assistant Washington state Attorney General Mary Lobdell said in a statement. "U.S. Fidelis hooked consumers by using a multitude of lies, including describing expensive service contracts as 'extended warranties' provided on behalf of specific manufacturers."

Oregon's attorney general called the warranties overpriced and full of exemptions, and 10 other states agreed, suing the now-defunct company and the owners for violating the Do Not Call laws, violating state licensing and registration rules and denying valid refund requests.

The brothers have agreed not to sell auto warranties or do telemarketing in the states participating in this settlement.

As part of the agreement, the Atkinsons surrendered at least 90% of their assets, including $10.5 million cash, Darain's 40,000-square-foot mansion, 11 cars and 14 motorcycles. The states are negotiating with the bankruptcy estate to try and reimburse creditors and clients.

States involved in the settlement include Arkansas, Idaho, Iowa, Kansas, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington and Wisconsin.

Other states have actions pending.
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