In a press release today, the US Department of Justice reported that Darain Atkinson had pled guilty to conspiracy to commit mail and wire fraud and filing false tax returns.
Together with his brother Cory Atkinson (who is still presumed innocent until proven guilty), Darain Atkinson owned and operated several businesses: National Auto Warranty Services (NAWS), US Fidelis and Dealer Services and a direct mail service, DS Direct.
The Department of Justice reported that:
The primary business of NAWS was marketing and selling vehicle service contracts (VSCs) through the United States. . . NAWS employed a variety of false, deceptive and materially misleading sales and marketing techniques. . . Among these techniques were mailers that were intended to mislead consumers into believing that the consumers were in some way extending a manufacturer's warranty, and that failed to disclose material limitations on the VSCs being sold.
Darain Atkinson told his staff to withhold portions of refunds for customers who canceled their VSCs, and the cancellation and refund process was made deliberately difficult for customers.
Atkinson admitted filing a false tax return in 2006. Millions of dollars that the brothers received from NAWS went to support the brothers' lavish lifestyle, including and .
Atkinson could serve up to five years in prison and/or fines up to a quarter million dollars for the conspiracy charge, and up to three years in prison and/or a quarter million dollars fine on the tax charge.