04 Jun

Medifast Victory For Tracy Coenen

medifastAnother victory for Tracy Coenen in the malicious lawsuit filed more than 4 years ago by Medifast (NYSE: MED) related to their Take Shape for Life business unit. In 2011, I was dismissed from the lawsuit following my successful filing and argument of an anti-SLAPP motion. Medifast immediately appealed that decision to the United States Court of Appeals for the Ninth Circuit.

Today, my dismissal from the Medifast lawsuit was affirmed by the Court of Appeals, which said:

5. Finally, we affirm the district court’s order granting of Coenen’s anti-SLAPP motion. Coenen’s statements were either not libelous per se or were republications for which she should be afforded immunity under the CDA.
6. Appellee Coenen shall recover her costs on appeal. All the other parties shall bear their own costs on appeal.

Medifast can suck it.

01 Oct

Multi-Level Marketing Companies and Pyramid Schemes

For decades, muti-level marketing companies like Amway, Mary Kay, Herbalife, Avon, and Usana have fought against being labeled as pyramid schemes. They say that pyramid schemes are illegal, and that their MLM business format is perfectly legal.

My definition of MLMs is a little nuanced. I tend to call them legalized pyramid schemes. What I mean by this is that multi-level marketing companies are indeed pyramid schemes, but our state and federal governments allow them to operate and generally call them legal if they have the right window dressing. Read More

16 May

Take Shape For Life and Medifast: Court Filing Explains Pyramid Scheme Allegations

This week, response briefs were due from the defendants in the case of Medifast v. Barry Minkow, Fraud Discovery Institute, Robert FitzPatrick, Tracy Coenen, and Sequence Inc. I was dismissed from Medifast’s SLAPP suit (see information on the lawsuit here), and my brief  in the Medifast appeal can be found here. The brief of Minkow and Bob FitzPatrick was also filed this week, and sheds some light on the allegations that Take Shape For Life (TSFL) and Medifast are offering a pyramid scheme to distributors (called “health coaches”).

The entire brief filed on behalf of Minkow, FDI, and FitzPatrick is found here (10MB file). Below I highlight some of the most relevant (and most interesting) portions, particularly the bits regarding the allegations that Medifast’s multi-level marketing business is a pyramid scheme or endless chain recruitment scheme. Read More

31 Jul

Barry Minkow Sentenced to Five Years’ Imprisonment on Stock Manipulation Conspiracy

United States Attorney’s Office
Southern District of Florida
July 21, 2011 Press Release

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced that defendant Barry Minkow, 44, of San Diego, California, was sentenced today on one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, for his participation in a scheme to manipulate the stock price of Lennar Corporation (Lennar) through false and misleading statements about Lennar’s business operations and management. At today’s hearing, U.S. District Court Judge Patricia A. Seitz sentenced Minkow to five years in prison, to be followed by three years of supervised release. In addition, the Court ordered Minkow to pay $583,573,600 in restitution. Read More

29 Mar

Medifast “Take Shape For Life” Lawsuit: Total Vindication for Tracy Coenen in SLAPP Suit

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. Read More

18 Jan

The Truth Comes Out in the Medifast Litigation

UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

Nearly a year ago, Medifast Inc. (NYSE:MED) filed suit against me and several others, for what it claimed was defamation of its Take Shape For Life division (TSFL). My client initiated an investigation of Medifast more than year prior to the filing of the lawsuit, and published several reports on the company. I was retained as a consultant to do a small bit of analysis. Some of my work was included in reports published by the client, parts of which were reproduced on this blog, along with some of my own analysis of Medifast and TSFL.

TSFL is a multi-level marketing company which peddles weight loss products. It entices new “health coaches” to invest in the system with claims of “healthy body, healthy mind, healthy finances.” I was critical of this business model, as I frequently am with MLMs. Read More

18 Sep

The Fun Continues in the Medifast Litigation

Lainie E. Cohen, Esq.

Lainie E. Cohen, Esq. arriving for my deposition (click to see full size)

UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

For nearly two years, Medifast (NYSE:MED) and its lawyers have known that I am not an appropriate target for a lawsuit. Nonetheless, they have pursued their malicious civil suit against me. Since the suit was filed, Medifast has been made aware of all the reasons why they shouldn’t be suing me:

  • I never said anything false about the company
  • I’m not aware of anything false that my co-defendants said, and which I later reprinted on this blog (and reprinting the writings of others does not make me responsible for those writings)
  • Every bit of evidence produced during discovery shows that I was not part of any conspiracy, and that I actually went out of my way to make sure that false statements or assumptions weren’t made or published about Medifast

But why let a little thing like the truth get in the way? Read More

20 Jul

Medifast is Abusing the Legal System to Punish Critics of Take Shape For Life

Medifast General Counsel Michael Tanczyn, Esq. at the deposition of Sam Antar. (click to enlarge)

UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

Earlier this year, Medifast (NYSE: MED) filed a $270 million lawsuit against Barry Minkow, me, and several other defendants for what it has alleged are false statements and a conspiracy to damage the stock price of the company. This lawsuit is nothing more than the typical big company suing a critic to shut her up. Medifast has far more resources than any of the defendants, and the company was hoping that by suing us, we’d shut up about the company’s multi-level marketing division Take Shape For Life (TSFL). Read More

28 Apr

Medifast Lawsuit: Anti-SLAPP Motions Filed

UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

Anti-SLAPP motions have been filed in the Medifast lawsuit by me and by my co-defendant, Robert FitzPatrick. My motion can be read in its entirety here, and Fitzpatrick’s can be read here.

SLAPP stands for Strategic Lawsuit Against Public Participation.  It’s basically when a big company tries to shut up a little guy with expensive litigation. In my opinion, Medifast sued me and others in an attempt to get us to stop publicly analyzing or criticizing the company and it’s multi-level marketing business model. Read More