More than a year ago, Medifast Inc. (NYSE:MED) sued me, my company Sequence Inc, Barry Minkow, his company Fraud Discovery Institute, Robert FitzPatrick, William Lobdell, and an anonymous message board poster for defamation. Barry Minkow and FDI initiated an investigation of the company in 2008, and the rest of us researched the company and contributed our opinions to FDI’s reports on the company and its multi-level marketing division Take Shape For Life (TSFL).
We criticized the company and its MLM business model. We expressed negative opinions about the disclosures Medifast makes about this “business opportunity.” I dared to suggest that Medifast might be a weight loss pyramid scheme.
A year after the first report on the company was released by FDI, Medifast sued us for $270 million, alleging defamation, criminal conspiracy, unfair business practices, and market manipulation. The defendants each filed anti-SLAPP motions, basically saying that Medifast was attempting to silence critics in violation of our First Amendment rights.
It was clear to me that Medifast was trying to intimidate anyone who might dare to criticize the company. Give a negative opinion of Medifast and TSFL, and you too could be subject to a malicious multi-million dollar lawsuit filed by a company with deep pockets. And don’t expect those suing you to play fair. Medifast took the opportunity to blatantly lie to the court on multiple occasions.
The defendants each filed anti-SLAPP motions in the case, requiring the defendants to prove that their activity is protected conduct (such as free speech protected by the First Amendment), and requiring the plaintiff to demonstrate a probability of prevailing on their claims.
After months of discovery and hundreds of thousands of dollars in legal fees, the process ended with oral arguments in front of Judge Janis Sammartino. In a decision released today, the judge granted my anti-SLAPP motion and I will be dismissed from the case.
What does this mean? The truth has prevailed. Total vindication for Tracy Coenen in the malicious lawsuit brought by Medifast Inc. The judge ruled that I did not defame Medifast, and now Medifast is on the hook for all of my legal fees, which are in the hundreds of thousands of dollars. It should be noted that Bill Lobdell, Barry Minkow, ibzreporting.com, and Fraud Discovery Institute were all dismissed from the case as well. Medifast is allowed to proceed against Robert FitzPatrick on the issue of libel per se.
While it may be true that Barry Minkow has engaged in some bad acts, I did not know about any of them and I did not participate in any of them. I was simply a consultant doing work for a client, and I stand behind the work I did. While Barry may have lied to the court, fabricated documentation, destroyed evidence, concealed witnesses, and intentionally hid information, I was not involved in any of those bad acts and did not know that they were occurring. I never engaged in any misconduct in any litigation, and I was not involved in the concealment or destruction of any evidence.
The court has ruled in the Medifast case, and I have been exonerated. It has taken a long time and a lot of money, but the judge has made it clear that I did not defame Medifast, and the company was not justified in bringing suit against me.
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