Direct Sales and MLM

Medifast Lawsuit Proceeds

By
Kevin Thompson

I need to tip my hat to my sources. Mel Atwood sent me the link to Rod Cook's site. Thanks, Rod, for breaking the story.In February of 2010, Medifast filed a lawsuit against a few of the prominent MLM detractors. Namely, Barry Minkow, Tracey Coenen and Robert Fitzpatrick. I've written about Barry Minkow's antics game before. Since writing the first article about Barry, he has apparently been charged with Securities Fraud (source). Note, I have not taken the time to confirm the accuracy of the criminal charge; however, Len Clements is as reliable a source as they come.In the lawsuits, the defendants all filed motions to have the lawsuit dismissed. The majority of claims were dismissed. However, based on one of Fitzpatrick's reports where he concludes that Medifast was an "endless chain scheme," Fitzpatrick's motion was Denied.This is significant for a few reasons. First, when you're critiquing a company, be careful. Be sure to calculate your words to express your opinion instead of making statements of fact. Statements of fact designed to convince others of the truthfulness of the words are actionable, opinions (in most cases) are not. I'm not familiar with Medifast's model and I'm not in a position to say Fitzpatrick was wrong or not. However, I will say, the method could have been better. Second, if there's no settlement, there's going to be a trial about Medifast's business model. In defamation actions, truth is an absolute defense. When Medifast sued for defamation, it opened up the door for the defendants to say "it's the truth, and here's why." Sometimes, when filing a lawsuit, the gun can kick harder than it shoots. I'm assuming Medifast was aware of this and they're confident that their model can withstand the scrutiny. Regardless, this is going to be a case to watch.Start reading from page 14.Medifast vs Minkow, et alposted via email by poseterous

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