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.
In mid-2009, Barry Minkow and Fraud Discovery Institute began investigating Medifast Inc. (NYSE:MED), and published several reports on the company and its business model. The company was compared to Your Travel Biz (YTB), a company that was under fire from the authorities for being an alleged pyramid scheme.
There were questions about Medifast’s auditors, but most notably, the company was criticized for the fact that its financial growth was due almost completely to the recruitment of new “coaches” into its Take Shape for Life (TSFL) division. A month ago, the most recent report on Medifast’s recruitment business was published by multi-level marketing expert Robert FitzPatrick, and Medifast’s management promptly misled shareholders by claiming these allegations were made by “convicted felon” Barry Minkow.