ST. LOUIS, Mo. (KMOX) — Cory Atkinson was sentenced to 40 months in prison Tuesday on charges of conspiracy to commit mail and wire fraud, and filing false tax returns. In addition to the prison sentence, he was ordered to pay over $4 million restitution to the IRS.

Atkinson made no statement in court, and when asked on the court house steps afterwards if he had an apology for his victims, he avoided saying “I’m sorry.”

“You know, it’s just sad how this whole thing turned out, and that’s for everyone involved,” Atkinson said.

According to court documents, Cory Atkinson and his brother Darain Atkinson owned and operated US Fidelis, which was the nation’s largest marketer of vehicle service contracts (VSCs). Prior to 2009, the business operated under the name National Auto Warranty Services, Inc. (NAWS). US Fidelis / NAWS was structured as a privately held company with each brother owning 50% of the business.

US Fidelis made its money by marking up the price of the VSC, which was often more than $1,000. The total purchaser cost for a VSC was often greater than $2,000. US Fidelis used a variety of techniques to market and sell VSCs, including direct mail to consumers, media advertisements, and unsolicited telephone calls.

According to court documents, as part of a criminal conspiracy, in 2008 Darain and Cory Atkinson made fraudulent payments on behalf of VSC purchasers who were in default or likely to be in default so that US Fidelis would receive its dealer profit when it was not entitled to receive such profit.

Atkinson was asked by reporters what lessons he learned from his downfall about the temptations of greed, but his answer seemed to blame the state of Missouri for his troubles.

“Be careful how fast you grow as a company, and be careful what state you’re in, and be careful of their agenda.  That’s all,” Atkinson said walking away. 

In addition to the conspiracy charge, with his plea, Cory Atkinson also admitted that he filed a false tax return for the tax year 2006 that failed to include millions of dollars in distributions that he received from US Fidelis. According to the plea agreement, between 2006 and 2008, Darain and Cory Atkinson received millions in distributions from US Fidelis, a substantial percentage of which funds were used to pay for their personal and non-business expenses. For example, records from US Fidelis indicate that in 2006, Cory Atkinson received distributions in excess of $14 million but reported no taxable income. In 2007, Cory Atkinson filed a joint federal income tax return that omitted more than $1 million in taxable distributions from US Fidelis. The tax loss to the United States was more than $4 million.

Cory Atkinson, 42, of Chesterfield, MO, pled guilty in June to one felony count of conspiracy to commit mail and wire fraud, and one felony count of filing false tax returns, and appeared today for sentencing before United States District Judge Catherine D. Perry.

Darain Atkinson, 47, St. Louis, MO, pled guilty April 9th, to one felony count of conspiracy to commit mail and wire fraud, and one felony count of filing false tax returns, and is scheduled for sentencing September 25, 2012.  He’s expected to get a term twice as long as his brother.

Copyright KMOX

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