The State of Missouri is asking a federal bankruptcy judge to allow independent oversight of US Fidelis' bankruptcy proceeding.
Missouri Attorney General Chris Koster says an independent trustee is needed to protect assets for the company's customers.
US Fidelis, a Missouri-based marketer of extended auto warranties, filed for bankruptcy protection earlier this month. The company suspended all sales activity in December 2009, amid consumer fraud complaints and a slew of lawsuits.
Koster also urged the need for a top-to-bottom, scrupulous financial examination of the company, citing concerns regarding explicit business practices intended to defraud consumers.
"The filing of the US Fidelis bankruptcy does not end the state's interest in protecting policyholders of the company," Koster said. "Existing policy holders deserve to have their contracts fulfilled. In addition, evidence suggests that many former policyholders may still be owed money. We're asking the Court to order the appointment of an independent trustee, and urging that a top-down financial review is appropriate."
'Enriched themselves'
Koster said his office is concerned that the owners of the company used the business to enrich themselves to the detriment of consumers. According to documents filed with the court, the brothers that own US Fidelis owe more than $66 million.
Over the years, ConsumerAffairs.com has received hundreds of complaints from unhappy US Fidelis customers, who tell similar stories when it comes to getting the company to pay a claim.
"Every time I call Fidelis claims it's a different reason , number of receipts or something is missing or they just don't accept that one for whatever reason, low and behold I have to have my car," Darlene, of Middleburg, Fla., told ConsumerAffairs.com.
Koster, meanwhile, has been a long-time critic of extended auto warranty companies, saying the policies are of dubious value, at best. In December 2009, he sued four companies he said were selling bogus auto warranty products.
"I believe this warranty business is rampant with fraud, and Missouri continues to be at the center of this deception," Koster said at the time. "This office will continue to pursue and prosecute businesses such as these that target unsuspecting, innocent consumers."
