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.

The Medifast (NYSE:MED) lawsuit against Barry Minkow, Fraud Discovery Institute, me, Robert FitzPatrick, William Lobdell, and others marches on. Yesterday, the Medifast lawyers filed an amended complaint in the case. The passage of time has not made Medifast or its lawyers more honest, however, as the amended complaint repeats factual inaccuracies (those are called lies in my world) and even expands on them.

Grab a cup of coffee and kick up your feet while you read the amended complaint. The document now alleges a civil conspiracy related to Medifast’s Take Shape for Life (TSFL) division, and repeatedly refers to the defendants as co-conspirators. I can’t speak for the other defendants, but I certainly know that I conspired with no one. I simply performed services for a paying client, and I wrote about Medifast on this blog in a continuing effort to advance the discussion of the pitfalls of multi-level marketing.

Here are some of the more amusing points that Medifast makes in its amended complaint:

  • Medifast continuously states that the “conspiracy” was aimed at driving down the price of the company’s stock. I don’t disagree that Medifast’s stock has gone down and has gone up over time. I can’t tell you by how much or even when those changes took place, because I simply don’t care. I’ve never cared what the company’s stock price is, and I’ve never engaged in any actions targeted at affecting the company’s stock.
  • The lawyers continue to falsely maintain that publishing the written materials of others (FitzPatrick’s reports, Minkow’s press releases) means that I’ve adopted their statements as my own. That’s simply not the way things work. Indeed, a person can publish the writings of another and not adopt those writings as her or his own.
  • The amended complaint states that the defendants have engaged in “defamatory attacks which have continued to grow exponentially over the past year, and still continue relentlessly on a daily basis…”  A simple look at my website proves that no discussion of Medifast and TSFL has grown exponentially, and that it has never occurred on a daily basis.
  • Medifast claims that “While investigating, Minkow and his co-conspirators then take a short position in the target company’s stock.”  The company and it’s lawyers can’t be bothered with silly little things called facts. My response to their lawsuit clearly stated that I’ve never taken a short position in Medifast stock. In fact, I’ve never taken any position in any stock of any company I’ve been retained to investigate.
  • The amended complaint alleges that Minkow “gets” me to republish his “false allegations” on my website, and that we (the alleged co-conspirators) “reap huge profits” when the stock price of the target of our investigation falls. Minkow doesn’t “get” me to do anything. He pays me for fraud investigation services, and what I write or don’t write on this site is my choice. And again, there are no huge profits to reap, since I don’t invest in the stock of the targets of our investigations. (But Medifast already knows that, and you do too.)

Then we get to the really good stuff. Can the Medifast lawyers actually read and comprehend? Because they have the uncanny ability to misstate some very clear writings on my site. I wonder if their misstatements are intentionally designed to mislead the court…

  • Medifast claims that I stated in an article on my blog that BJL Wealth Management recommending the purchase of Medifast stock to an FDI operative “would certainly be a conflict of interest for Medifast and its auditor, Baggell, Josephs, Levine & Company.” That’s an outright lie.  What I really said was “An auditor working in the capacity of an investment advisor does not automatically give rise to independence issues.” I discussed what would and would not constitute a conflict of interest, but I gave no conclusion as it relates to the Medifast situation because I simply did not have enough information to render an informed opinion.
  • The lawyers go on to falsely state that on my blog, I stated that TSFL health coaches “are required to put up their own money.” A simple reading of the article they reference shows that no such statement was ever made by me.
  • It gets even better as Medifast falsely states that I “…maliciously [lead] readers to believe that Medifast is not complying with some unknown and undisclosed legally mandated reporting requirements, without disclosing to readers that no such reporting requirements actually exist (a fact that should be well within the knowledge of a forensic accountant like Coenen).” Again, this is a flat-out lie by Medifast and its lawyers. The article in question states “We’ll never know for sure, as Medifast doesn’t disclose how much money the coaches are making, how much they spend on expenses of the business, what their attrition rates are, or how many recruits are actively selling or recruiting.” There is no reference to any legal mandates or reporting requirements. The sentence speaks for itself. It states that Medifast doesn’t disclose to the public certain numbers, when in fact, that is the case.

There are many more inaccurate statements of “fact” by Medifast and their lawyers in this amended complaint. I’ll let the court sort all of those out. But if I didn’t know better, I’d suspect that Medifast is continuing on with its factual inaccuracies only to increase the litigation costs for the defendants.

Yesterday, my attorneys filed an andti-SLAPP motion in the case. The bottom line is that Medifast is trying to step on my constitutionally protected right of free speech. They are hoping the cost of a $270 million lawsuit and  drawn-out litigation is too high for me and people like me… those who would criticize the questionable multi-level marketing business model of TSFL.

I am a fraud investigator by trade. I write about fraud all the time. I devote significant efforts to the issue of multi-level marketing. My criticism of Medifast and TSFL falls right in line with that. Who is Medifast to say I have no right to criticize their business model?

Providing information to consumers about Medifast is part of what I do professionally. But consumers don’t have to take my word for it. I provide links to plenty of resources regarding MLM, and consumers are free to make their own decisions about the legitimacy of the business model.

Medifast wanted a fight, and now they’ve got one. I won’t be bullied by a corporation that lies to the court about the facts and tries to trample on my constitutionally protected rights. Game on.


  1. […] But why let a little thing like the truth get in the way? […]

  2. […] I did not give an opinion on the situation with Medifast, and Bagell, Josephs, Levine, but that did not stop the Medifast lawyers from lying about what I said in their lawsuit against Barry Minkow, me, and […]

  3. Sequence Inc. Fraud Files Blog 12/03/2010 at 5:02 am

    […] It doesn’t matter that Medifast has completely lied about me and my work in multiple court fil… It doesn’t matter that all the evidence that had been uncovered in the lengthy discovery process not only proves Medifast lied about me and my work, it goes even further and shows that I did the opposite of what Medifast has claimed. Nonetheless, Medifast has been allowed to drag this litigation out for months, and the earliest possible resolution for me will come more than a year after the malicious lawsuit was filed. Yes, it is taking a year for the court to actually consider my anti-SLAPP motion. My motion was originally filed on April 12, 2010. Yet we will not argue the motion until nearly a year later. […]

  4. Sequence Inc. Fraud Files Blog 12/16/2010 at 8:47 am

    […] Posted on December 16th, 2010 Robert FitzPatrick filed an absolutely riveting anti-SLAPP motion in the case brought against us by Medifast Inc. (NYSE:MED) and its Take Shape For Life (TSFL) multi-level marketing division. Below is probably the most interesting part of the filing. It discusses at lengthy the shady past of the company, efforts to improperly conceal the prior bad acts, and current dishonesty about Medifast and TSFL. It seems that lying to the court has become routine for Medifast. […]

  5. Sequence Inc. Fraud Files Blog 02/09/2011 at 9:50 am

    […] money), I got sued for $270 million. But the fun doesn’t stop there. Throughout the lawsuit, Medifast and its lawyers have been blatantly dishonest about what I have written about the company, and have made unfounded disgustingly false allegations […]

  6. Sequence Inc. Fraud Files Blog 04/01/2011 at 9:39 am

    […] 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. […]

  7. Sequence Inc. Fraud Files Blog 07/31/2011 at 1:18 pm

    […] they cannot prove their case, so they resorted to alternate tactics, and the judge is allowing it. Medifast has even been busy lying to the court, but hasn’t been held to account for this […]

  8. Sequence Inc. Fraud Files Blog 08/02/2011 at 11:23 am

    […] To make things interesting, Medifast added in allegations of some vast conspiracy between the defendants to harm the company. […]

  9. Sequence Inc. Fraud Files Blog 08/02/2011 at 11:32 am

    […] The second part is a huge hurdle for Medifast to get over. They won’t win on their claims related to my republishing of writings by FitzPatrick and Barry Minkow and Fraud Discovery Institute. Medifast is pretending that I adopted their writings as my own when I published them on my blog, but that’s contrary to the law on the issue. As to my own writings, there was nothing false in them, so Medifast can’t win on that issue. (And now is a good time to remind you that the Medifast attorneys have been lying to the court about what I’ve written.) […]

  10. Fraud Files Blog 05/15/2012 at 3:53 pm

    […] and its Take Shape For Life multi-level marketing business. Medifast sued me on February 17, 2010, lied repeatedly to the court about my writings leading up to the lawsuit, and ultimately the judge dismissed me from the lawsuit […]

  11. Fraud Files Blog 05/16/2012 at 3:50 pm

    […] 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 […]

  12. Fraud Files Blog 10/25/2012 at 6:01 am

    […] That hasn’t stopped Medifast from continuing the lies, however. And the company appears to be upset over my writings about the lawsuit. Management and the attorneys have falsely stated that I am writing about this case to get publicity for myself. The truth is that I write about this case to expose the lies and shady litigation procedure employed by the company. […]

Comments are closed.