Sunday, January 27, 2013
Repost: US Fidelis - Fleeced NASCAR Fans See Justice
The Wallace father and son made it personal. They assured fans on the TV commercials that the Wallace family could vouch for US Fidelis. Thousands of NASCAR fans trusted the Wallaces and signed-up, believing the extended warranties would cover almost everything. Unfortunately, it was all a lie.
"Trouble Brewing For Rusty Wallace And US Fidelis Sponsor" was a Daly Planet column from June of 2009. Click on the title to read it. Various media outlets had begun to report on the reality of US Fidelis. NBC's Today Show dropped a bomb with a look at what was happening inside the company. That video can be seen by using the story link above.
"Will NASCAR Learn From US Fidelis Collapse?" was the next column posted here in March of 2010 when the US Fidelis empire came crashing to earth. Click the title to read the story. The company had filed for bankruptcy and there was almost certainly going to be criminal charges coming for two of the company founders, Cory and Darain Atkinson.
What was not contained in the subsequent lawsuits and legal actions against US Fidelis were the names Rusty and Steve Wallace. While Rusty Wallace Racing was still owed over $500 thousand in sponsorship dollars when US Fidelis collapsed, that was the least of the worries for the Wallace family.
Federal law changed in the last decade in response to celebrities and athletes endorsing products and companies that were lying about goods and services. "Both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement," is the language of the new law.
This time, the Wallaces walked away with only a dent in their racing wallets. The much larger dent was in the wallets of NASCAR fans across the nation who unknowingly helped to contribute to the over $100 million in cash that the Atkinsons plundered in this scam before it was ended.
"NASCAR Fans Got Fleeced By US Fidelis" was the TDP column on this topic from November of 2010. Click on the title to read it. "U.S. Fidelis suckered consumers through a multitude of lies while its owners, the Atkinsons, drained money out of the company to maintain a lavish lifestyle,” said Washington State Attorney General Rob McKenna at the time. A multi-state task force had finally brought the Atkinsons to justice.
On Tuesday, Cory Atkinson plead guilty to fraud and tax evasion in Federal Court. He was sentenced to three years in prison. In ten days, he is expected to again plead guilty to state charges of fraud and should receive an additional four years in jail. His brother Darain, the mastermind of the scam, is expected to spend twice that amount of time in jail when he is also sentenced later this month.
As you can see from the reader comments on the 2009 and 2010 columns, it was quite apparent that something was up with this NASCAR sponsor from the start. Who can forget the endless replays of the Wallace family TV commercials and the unsolicited phone calls that were made by US Fidelis nationwide.
These days, Rusty's NASCAR racing is limited to his appearances in the Infield Pit Studio for ESPN. His race team is closed and his son is out of the Nationwide Series. It seems that perhaps the US Fidelis debacle has been long since forgotten by the NASCAR media.
The lasting damage from this incident is twofold. First, the financial impact felt by NASCAR fans who believed the sales pitch and contracted for extended service warranties with several thousand dollars paid upfront. They may never view Rusty and Steve Wallace quite the same way again.
Secondly, NASCAR thrives on brand loyalty and often uses that term when courting major sponsors. Wallace is a high-profile TV analyst and now a Hall of Fame member. This was not a backmarker hawking diet pills or bbq sauce to pay the tire bill. It was a well-known NASCAR personality selling a vehicle-related product directly to the fan base.
Did NASCAR learn a lesson? That has yet to be seen, but perhaps if Rusty Wallace Racing was alive and well right now the doorbell would be ringing with yet another notice of a civil lawsuit. After all, in today's world the consumer has just as much right to sue the endorser as they do the company providing the product.
At least the ugly end of the US Fidelis episode may give pause to drivers, media personalities and owners in terms of thoroughly researching the companies and products they choose to endorse in the future.
Additional links to the US Fidelis story are furnished below. We invite your opinion on this topic. Comments may be moderated prior to posting.
US Fidelis Co-Owner Gets 40 Months In Prison - ABC News
US Fidelis Co-Owner Makes No Apology, Blames Others as He’s Sentenced - KMOX/CBS
US Fidelis co-owner Cory Atkinson sentenced on tax and fraud charges - KDSK (with video)
Cory Atkinson sentenced to 40 months in prison on federal fraud charges - St. Louis Business Journal