[UPDATED] Former Executive Blew Whistle on E-Cigarette Maker From Weston; AG Investigating

Flickr

E-cigarettes are in the strange position of suing to prove they're a tobacco product.

​A Weston-based company called Smoking Everywhere wanted an executive who could go to battle against the FDA and U.S. Customs, which had teamed up to ban the import of e-cigarettes. But by hiring Ray Story in 2008, Smoking Everywhere may have got more than it bargained for.

Story -- who says he helped the company grab 60 percent of the market -- has left the company, and now he's taking the fight to his former Smoking Everywhere partners. The suit Story filed against the company has fueled an investigation by the Florida Attorney General's Office, which may be considering criminal charges.

Initially, Story clashed with one of the principals of Smoking Everywhere, Elicko Taieb, about business strategy. The company was one of two plaintiffs enmeshed in an expensive lawsuit against the FDA, which was regulating e-cigarettes as drug devices. For this reason, e-cigarettes needed FDA approval. The companies argued that they should be defined as tobacco products, meaning they would be outside the purview of the FDA.

But if the e-cigarette companies won that suit, then, like other tobacco products, it would no longer be legal for them to sell their products online. Story says he argued that Smoking Everywhere should phase out online sales with an eye toward the future, when the products qualified as tobacco.

Taieb wanted to hold on to the internet sales engine, says Story. The former CEO says that during his time at the company, he learned of customer complaints. Credit cards were being charged automatically for refill cartridges, and customers couldn't reach anyone with the company to cancel their orders. Customers also reported difficulties getting refunds.

As it relates to a potential criminal charges, the question is whether these were merely glitches or whether Smoking Everywhere was deliberately cheating its customers. "I believe that in some cases, it was deliberate," says Story.

UPDATE: Jason Weaver, who is the attorney for Taieb, denies that allegation. "They were quite truly and honestly mistakes that were made by a third party that was retained to do that job but did not do the job very well."

Weaver adds: "If had been intentional, then Story would have been part and parcel of that intentional act," given Story's executive position.

After he left Smoking Everywhere earlier this past year, Story filed suit against the company, arguing that it had misused funds and breached its fiduciary responsibilities. (Weaver calls these allegations "ridiculous.") Story's case quickly popped up on the radar of the Florida Attorney General's Office.

"When they contacted me about issues involving fraudulent charges and credit cards not being refunded... I said would be happy to assist you," says Story. "Because at the end of the day, I believe in the product."

The way Story sees it, e-cigarettes are a powerful tool for smokers who want a far less harmful alternative to tobacco, but companies like Smoking Everywhere give the rest of them a bad name. Since leaving, Story has launched his own e-cigarette company, Wannavape, which sells directly to retailers and does not ship products directly to customers.

Taieb and his attorney Weaver don't believe Story's claim about being driven purely by a desire to protect the industry. "His big motivation for this private suit is to get rid of a competitor," says Weaver.