Marc G. Nochimson, CPA, Medifast, and Deficient Audits

Standard

Alternative Title: Marc Nochimson, CPA makes the case FOR publicly identifying audit partners. (You really need to know if a goof like this was the engagement partner!)

In 2013, Marc G. Nochimson, CPA entered into a settlement agreement with the Securities and Exchange Commission based on his improper professional conduct as the engagement partner for the Medifast Inc. audits from 2006 to 2008. You may recall that in 2010, Medifast sued me (and several others) for negative opinions we expressed about Medifast.

Among the negative opinions: Medifast’s increasing revenue is the result of an endless chain recruiting scheme.  Medifast doesn’t disclose certain figures that would allow consumers and investors to fully evaluate the company and its business. Sam Antar criticized Medifast for its revenue accounting. Others criticized the company’s revenue and business model. Indeed, Medifast did overstate it income, resulting in a civil penalty and a cease and desist order from the SEC.

As time goes on, it appears more likely that our criticisms of Medifast were spot on. It also appears that the professionals affiliated with Medifast did not meet professional standardsThe SEC determined that the Marc Nochimson audits of Medifast were deficient, in that the company’s financial statements were NOT presented in accordance with Generally Accepted Accounting Principles (GAAP). Medifast did not properly account for its income tax expense and income tax provision, resulting in financial statements that were materially misstated. The SEC determined that Marc Nochimson, CPA did not conduct the Medifast audits in accordance with PCAOB standards. It was determined that:

“… he failed to exercise due professional care and professional skepticism, failed to obtain the necessary training and proficiency in the area of income taxes, failed to adequately plan and supervise the audits, failed to obtain sufficient competent evidential matter, and failed to prepare and retain adequate work paper documentation.”

The AICPA also disciplined Marc Gary Nochimson, CPA for this series of events.

Nochimson was the audit partner on the Medifast audits from 2006 to 2009, while a partner at the accounting firm Bagell, Josephs, & Levine. Marc Nochimson, CPA is currently a parter at accounting firm Friedman LLP (although he’s not even listed on their site), and now holds himself out as an expert in tax and audit related services:

Marc G. Nochimson is an expert at tax planning, tax preparation, and other related audit services in New Jersey. He is the partner in Friedman LLC, one of the best attorney firms in New Jersey since 2005.

I think you mean “accounting” firm????

Marc’s website features hilarious text such as this:

For any tax payer filing of the taxes and tax returns can also be a very complicated task but it is to the credibility of Marc to gain the in depth knowledge and understanding of the tax rules and now he guides and counsels the tax payers and reduce their burden.

It is curious that Marc Nochimson, CPA holds himself out as a tax expert, as the SEC settlement indicated that Nochimson had only a limited understanding of FAS 109 (Accounting for Income Taxes) and did not sufficiently understand Medifast’s tax provision.

As a result of this settlement, Marc Nochimson was barred from appearing or practicing before the SEC as an accountant (meaning he can’t audit public companies) for at least a year. After the year, he was allowed to request reinstatement, although it is not clear whether he ever did that.

Nochimson has also magically become an expert in forensic accounting.

And if that’s not funny enough, how about this one:

Marc, a responsible member of Public Company Action Oversight Board (PCAOB), has been doing his job of examining the behaviour of all the companies and clients in synchronization with the compliance regulations. He is the most intelligent and ingenuous auditor as well as an accountant to contemplate and guide his clients by putting forward the analysis of all possible strategies, its implications, advantages and shortcoming of each.

Marc apparently can’t even be bothered to review the websites he puts up about himself, and would rather just let the writers post nonsense about him at will.

It seems to me that Marc is just having a bunch of low quality websites created about him to try to bury the SEC action letter that comes up first when one Googles him. Good luck with that.

It is curious that attorneys and auditors alike who have been affiliated with Medifast have questionable professional activities.

Leave a Reply