Bankrupt Brothers Spare Wives and Customers

The St. Louis Dispatch has reported that brothers in business, Darain and Cory Atkinson, will pay approximately $10.5 million in a proposed settlement in federal bankruptcy court.

Another $10 million in assets may also be surrendered.

The bankrupt company, US Fidelis, claimed to be the nation's top marketer of auto-service contracts. Now creditors and customers alike are hoping to receive refunds. 

The customers believe that the extended warranties that they purchased from Fidelis were made fraudulently. There have been many accusations, during the bankruptcy filing, that Fidelis used illegal telemarketing techniques and sold fake warranties.

US Fidelis is based in Wentzville and filed for bankruptcy in St. Louis this past March. 

The bankruptcy documents made public have suggested that the brothers spent Fidelis money on expensive lifestyles for both themselves, and, their families. 

The company, and the brothers, are sharing all of its financial details with federal prosecutors and have yet to be charged with any crimes.

The proposed deal is for the Atkinson wives to each keep $500,000, jewelry, clothes and household items. They are not allowed to share any of theses assets with their husbands. 

Assets are being collected into a fund for both creditors and customers that agree not to sue the brothers. One issue being faced is valuing the 10 residential properties that the Atkinsons purchased when real estate investing was at its height. 

The brothers have already paid $1.1 million, in retaining criminal-defense lawyers, and that money is not part of the recovery settlement. 

US Fidelis filed a lawsuit against the brothers in April that alleged that the two spent $101 million of the company's money to pay exorbitant salaries, make cash distributions and to support their high-end lifestyle. The settlement apples only to this lawsuit.

The primary residence for Darain and Mia Atkinson, that they spent $26.7 million to build, is now listed for $14.9 million. The brothers also own at least 14 motorcycles, 11 boats and 11 cars.

Fidelis is wary of being able to recover the amounts that the brothers paid for the other assets just as they are with the homes.

The brothers will, under this proposed settlement, surrender a majority of their home furnishings. They also have to give up several items of jewelry that include Rolex watches, 17 items from Tiffany & Company and 11 items from Cartier.

Mia Atkinson can keep up to only $25,000 in jewelry and up to $50,000 in furnishings. She may also keep two vehicles as long as the total resale value doesn't exceed $75,000. Heather Atkinson can keep up to $75,000 in jewelry and furnishings combined, and her two vehicles must not go over a resale value of $50,000.

Cory Atkinson's three children will be able to hold onto about $250,000 that was saved in a savings plan for their education.

The bottom line is that if  the Atkinson brothers are found to have lied about their assets, the entire settlement deal will be voided and the brothers may be held for perjury charges.

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