11 state attorneys general join pressure to appoint trustee over US Fidelis
Attorneys general from 11 states have joined a Missouri-led effort urging a bankruptcy judge to appoint an independent trustee to run US Fidelis, the Wentzville-based company that once led the nation in the sale of extended auto service contracts.
Last month, Missouri Attorney General Chris Koster asked U.S. Bankruptcy Judge Charles E. Rendlen III to appoint the trustee. Koster accused US Fidelis owners Darain and Cory Atkinson of plundering the company by illegally transferring the firm’s assets in order to put them out of reach of creditors, including several hundred consumers.
US Fidelis is now run by turnaround consultant Scott Eisenberg of Amherst Partners, based in Birmingham, Mich.
Eisenberg has said repeatedly that, since taking over last month, he has had no direct contact with the Atkinson brothers. Under Eisenberg’s leadership, the company has threatened to sue the Atkinsons to recover about $65 million that he believes they and companies they control owe US Fidelis.
Backing Koster’s accusations in court filings on Wednesday is Mary Lobdell, an assistant attorney general in Washington state who led a multistate investigation of US Fidelis that looked into widespread allegations of consumer fraud and telemarketing violations overnight pay day loans.
Lobdell noted in a filing that Darain and Cory Atkinson have not resigned from their executive positions — president and vice president, respectively — and that the brothers still could interfere with the running of the company.
"Given past business practices, the States have no confidence that the Atkinsons will keep the Debtor at arms length," she stated in the filing.
Also joining the call for the appointment of a trustee are attorneys general from Ohio, Iowa, North Dakota, Arkansas, Oregon, Maryland, Wisconsin, North Carolina, West Virginia and Tennessee. A hearing is scheduled for May 26.