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July 11, 2023

New York City Lawsuit Accuses Vape Distributors of Racketeering

July 12 update: Magellan responds
In a press release issued today, a Magellan Technology/Demand Vape spokesperson called the New York City lawsuit a “baseless attack,” charging that the legal action has been.”orchestrated by outside special interest groups looking to inflict lasting reputational damage on honest New York businesses.”

Magellan says the supposed proof cited in the lawsuit that the company sells illegal products directly to New York City customers is based on sales by an unaffiliated commerce website that Magellan is “actively pursuing federal anti-cybersquatting and trademark infringement claims against.”

Regarding charges the company violated the federal Prevent All Cigarette Trafficking (PACT) Act, the spokesperson said Magellan and Demand Vape have “scrupulously complied with all relevant federal, state, and city requirements in the operation of their business, including by registering and filing complete shipment reports and tax returns with all states where required by the PACT Act.”

The company spokesperson added that defendants Magellan, Demand Vape and company officer Matthew Glauser “are prepared to vigorously oppose the City’s allegations,” and plan to pursue defamation claims against anti-vaping groups that have made “public and patently false allegations” against them.

Facing a breaking campaign scandal and the typical overflowing to-do list of any big city leader, New York City Mayor Eric Adams decided Monday to take a break from reality and tackle the issue of flavored vaping products.

At a podium flanked by members of Parents Against Vaping (PAVE), Adams and the city’s corporation counsel announced New York City has filed a lawsuit in federal court charging four vape product distributors and six associated individuals with illegally selling flavored vaping products in New York.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, accuses the defendants of violating “nearly every federal, New York State and New York City law applicable to the marketing, distribution, and sale of flavored ecigarettes, the sales of which are prohibited under laws enacted by all three jurisdictions.”

The lawsuit accuses the companies and individual defendants with mail and wire fraud, and violations of New York City’s Administrative Code, New York State Public Health Law, and the federal Tobacco Control Act. The city says the four companies violated both the federal Racketeering Influenced Corrupt Organizations (RICO) Act and the Prevent All Cigarette Trafficking (PACT) Act.

The city says it “seeks to recover monetary damages and civil penalties from the defendants, potentially totaling millions,” according to a hyperbolic press release full of factual errors (for example, the FDA did not “ban flavored vape products” in 2020). The lawsuit announces that the city will seek triple the damages awarded at trial under the RICO law.

The companies named in the lawsuit are all located in New York State:

  • Magellan Technology Inc. – Buffalo
  • Ecto World LLC (which does business as Demand Vape) – Buffalo
  • Mahant Krupa 56 LLC (Empire Vape Distributors) – Queens
  • Star Vape Corp. – Brooklyn

Also named were six officers or employees of the companies: Matthew Glauser, Donald Hashagen, and Russell Rogers (Magellan/Demand); Nikunj Patel and Devang Koya (Empire); and Nabil Hassen (Star Vape).

The lawsuit was announced Monday afternoon—the first weekday after news broke last Friday about supporters of Mayor Adams charged with conspiring to funnel illegal campaign contributions to Adams’ 2021 mayoral campaign. Adams himself has not been accused of wrongdoing, but Manhattan District Attorney Alvin Bragg said the contributions were probably intended to gain influence at City Hall.

Image courtesy New York City Office of the Mayor

Smokers created vaping without help from the tobacco industry or anti-smoking crusaders, and I believe vapers have the right to continue innovating to help themselves. My goal is to provide clear, honest information about the challenges vaping faces from lawmakers, regulators, and brokers of disinformation. I’m a member of the CASAA board, but my opinions aren’t necessarily CASAA’s, and vice versa. You can find me on Twitter @whycherrywhy
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Jeremy
Jeremy
7 months ago

I would like to know more about this. Did the FDA seek to ban vape juice? Have they ever attempted to do so? I am fine with regulating the industry like they do alcohol; being over 21 for example. Is it unlawful to buy and distribute vape juice in New York or other places? Thankfully where I live there is a vape store within walking distance of my home and I can order online whatever I wish. Even if they put a special tax on it like alcohol and tobacco, that would not stop my consumption of a product that… Read more »