[Federal Register Volume 67, Number 43 (Tuesday, March 5, 2002)]
[Notices]
[Pages 9989-9991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5219]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


North American Group Revocation of Registration

    On July 29, 2000, the Administrator of the Drug Enforcement 
Administration (DEA), issued an Order to Show Cause (OTSC) to North 
American Group, located in Kissimmee, Florida, notifying it of a 
preliminary finding that, pursuant to evidence set forth therein, it 
was responsible for the diversion of large quantities of List I 
chemicals into other than legitimate channels. Based on these 
preliminary findings, and pursuant to 21 U.S.C. 824(d) and 28 CFR 0.100 
and 0.104, the OTSC suspended North American Group's DEA Certificate of 
Registration, effective immediately, with such suspension to remain in 
effect until a final determine is reached in these proceedings. The 
OTSC informed North American Group of an opportunity to request a 
hearing to show cause as to why the DEA should not revoke its DEA 
Certificate of Registration, 004407NAY, and deny any pending 
applications for renewal or modification of such registration, for 
reason that such registration is inconsistent with the public interest, 
as determined by 21 U.S.C. 823(h). The OTSC also notified North 
American Group that, should no request for hearing be filed within 30 
days, its right to a hearing would be considered waived.
    On July 31, 2000, a copy of the OTSC was affixed to the front door 
of the business premises, since no one appeared to be present at the 
business. On this same date, a second copy of the OTSC was sent 
certified mail, return receipt requested, to North American Group. The 
mailed OTSC was returned marked ``attempted--unclaimed.'' No request 
for a hearing or any other response was received by DEA from North 
American Group nor anyone purporting to represent it in this matter. 
Therefore, the Administrator of the DEA, finding that (1) Thirty days 
having passed since receipt of the Order to Show Cause, and (2) no 
request for a hearing having been received, concludes North American 
Group is deemed to have waived its right to a hearing. After 
considering relevant material from the investigative file in this 
matter, the Administrator now enters his final order without a hearing 
pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.
    The Administrator finds as follows. List I chemicals are chemicals 
that may be used in the manufacture of a controlled substance in 
violation of the Controlled Substances Act. 21 U.S.C. 802(34); 21 CFR 
1310.02(a). Pseudoephedrine is a List I chemical that is commonly used 
to illegally manufacture methamphetamine, a Schedule II controlled 
substance. Methamphetamine is an extremely potent central nervous 
system stimulant, and its abuse is a growing problem in the United 
States.
    A ``regulated person'' is a person who manufactures, distributes, 
imports, or exports inter alia a listed chemical. 21 U.S.C. 802(38). A 
``regulated transaction'' is inter alia a distribution, receipt, sale, 
importation, or exportation of a threshold amount of a listed chemical. 
21 U.S.C. 802(39). The Administrator finds all parties mentioned herein 
to be regulated, and all transactions mentioned herein to be regulated 
transactions, unless otherwise noted.
    The DEA investigation shows that Hesham Nabut (Nabut) is the owner 
and president of North American Group (NAG). On July 2, 1999, DEA 
conducted a preregistration inspection of NAG, and at that time 
provided Nabut with the DEA notices informing him that pseudoephedrine 
products are used in the illicit manufacture of methamphetamine; and 
that possession or distribution of a List I chemical knowing or having 
reasonable cause to believe it will be used to manufacture a controlled 
substance is a violation of the Controlled Substances Act.
    DEA approved NAG's application for registration to distribute List 
I chemicals July 6, 1999. Between July 23, 1999, and September 30, 
1999, NAg ordered approximately 2,592,000 pseudoephedrine tablets from 
one manufacturer. In October of 1999, NAG attempted to obtain an 
additional 3-4 million pseudoephedrine tablets from two other 
manufacturers.
    On September 14 and 15, 1999, law enforcement personnel seized 
approximately 11,300 bottles of pseudoephedrine tablets from 
clandestine methamphetamine laboratories in California. Using the lot 
numbers on the seized bottles, DEA traced the product back to NAG. On 
October 15, 1999, DEA seized 4000 bottles of pseudoephedrine tablets 
form a clandestine methamphetamine laboratory in Los Angeles, 
California. Using the lot numbers on the seized bottles, DEA traced the 
product back to NAG.
    In December of 1999, a DEA Confidential Source revealed that Hesham 
(last name unknown) and three other individuals shipped 16 boxes, with 
an aggregate weight of 1000 pounds, to Portland, Oregon. On

[[Page 9990]]

December 17, 1999, DEA seized the boxes, and found them to contain 
approximately 668,160 pseudoephedrine tablets.
    On January 7, 2000, a DEA Confidential Source revealed that Hesham 
Nabut was significantly involved in supplying pseudoephedrine to 
individuals for the illicit manufacture of methamphetamine. The 
Confidential Source further revealed that Nabut falsified documents, 
purportedly showing that he supplied pseudoephedrine to gift shops, but 
that in reality, the pseudoepherine is shipped to California and Oregon 
for the illicit manufacture of methamphetamine. A DEA Confidential 
Source also revealed that one of Nabut's shipments to Portland, Oregon 
was seized in late 1999 or early 2000.
    On January 13, 2000, DEA investigators observed an associate of 
Nabut loading large cardboard boxes from NAG's warehouse into a van. 
Eleven of these boxes were subsequently seized in California, and were 
found to contain 45 cases of 60 mg. pseudoephedrine tablets. The 
shipping labels bore fictitious names for both the shipper and the 
receiver, and a fictitious address for the shipper.
    On May 18, 2000, DEA investigators observed the owner of Denver 
Wholesale, a pseudoephedrine distributor also under investigation by 
DEA, arrive at the Orlando Airport where he was met by Nabut. On May 18 
and 19, 2000, DEA investigators observed Nabut and this individual meet 
with several other individuals currently under investigation by DEA for 
the illicit diversion of pseudoephedrine.
    On May 19, 2000, DEA investigators observed the delivery of 20 
large boxes of pseudoephedrine to NAG. On June 7, 2000, DEA 
investigators observed the delivery of an additional 25 large boxes to 
NAG. These boxes appeared similar to those previously received by NAG 
that DEA had confirmed contained pseudoephedrine.
    On June 8, 2000, DEA Diversion Investigators conducted an 
administrative inspection of NAG. The Diversion Investigators observed 
45 boxes of pseudoephedrine tablets. Each box contained 27,648 dosage 
units, for a total of 1,244,160 dosage units of pseudoephedrine.
    Therefore, pursuant to 21 U.S.C. 824(d), the Administrator of the 
DEA issued an immediate suspension of NAG's DEA Certificate of 
Registration. While the above-cited evidence provides ample grounds for 
an immediate suspension pursuant to Sec. 824(d), these grounds also 
provide the basis for the revocation of NAG's DEA Certificate of 
Registration.
    Pursuant to 21 U.S.C. 824(a), the Administrator may revoke a 
registration to distribute List I chemicals upon a finding that the 
registrant has committed such acts as would render his registration 
under section 823 inconsistent with the public interest as determined 
under that section. Pursuant to 21 U.S.C. 823(h), the following factors 
are considered in determining the public interest:
    (1) Maintenance of effective controls against diversion of listed 
chemicals into other than legitimate channels;
    (2) Compliance with applicable Federal, State, and local law;
    (3) Any prior conviction record under Federal or State laws 
relating to controlled substances or to chemicals controlled under 
Federal or State law;
    (4) Any past experiences in the manufacture and distribution of 
chemicals; and
    (5) Such other factors as are relevant to and consistent with the 
public health and safety. Like the public interest for practitioners 
pursuant to subsection (f) of section 823, these factors are to be 
considered in the disjunctive; the Administrator may rely on any one or 
combination of factors and may give each factor the weight he deems 
appropriate in determining whether a registration should be revoked or 
an application for registration be denied. See, e.g. Energy Outlet, 64 
FR 14,269 (1999). See also Henry J. Schwartz, Jr., M.D., 54 FR 16.422 
(1989).
    Regarding the first factor, maintenance of effective controls 
against diversion, the DEA investigation reveals Nabut contacted DEA 
from Jordan on July 24, 2000, regarding the alleged theft of 45 boxes 
of pseudoephedrine by an individual currently under investigation by 
DEA in a related case. Nabut alleged that 45 boxes of pseudoephedrine 
were removed from NAG by his brother and transferred to a public 
storage unit facility. Nabut admitted that the storage unit was rented 
by the same individual that he claims stole the chemicals, and further, 
he admitted the individual is not a business associate. DEA obtained a 
copy of the rental agreement, which stated that only the individual 
renting the unit had access. Nabut had left the United States and as in 
Jordan during the time these events allegedly took place. The DEA 
investigation showed, however, that only three boxed were originally 
place in the storage unit, and that these boxes were removed by an 
unknown individual sometime before July 7, 2000. The location of the 45 
boxes of pseudoephedrine that DEA investigators had observed at NAG 
during the June 8, 2000 administrative inspection is unknown. All 45 
boxes were missing at the time a criminal search warrant was executed 
upon NAG July 29, 2000.
    The Administrator finds the circumstances of this alleged theft 
very suspicious, and finds that regardless of the truth of the matter, 
NAG and Nabut failed to adequately protect this substantial amount of 
pseudoephedrine (totaling 1,244,160 dosage units) from diversion. 
Neither Nabut nor his brother was able to give investigators an 
adequate explanation regarding why the chemicals were removed from the 
NAG premises. The chemicals, or at least three boxes appearing to 
contain chemicals, were moved into a storage unit rented and controlled 
by a third party. Finally, Nabut apparently orchestrated the entire 
scenario from Jordan. The Administrator concludes that this finding 
alone provides ample basis for revocation of NAG's DEA registration.
    Regarding the second factor, compliance with applicable Federal, 
State, and local law, the investigative file in this matter contains 
information from a reliable DEA Confidential Source relating to Nabut's 
involvement in diverting pseudoephedrine to the manufacture of 
methamphetamine. The information is as follows: Nabut is significantly 
involved in a criminal organization devoted to the illegal supplying of 
pseudoephedrine to clandestine methamphetamine laboratories. The 
organization operates in Chicago, Los Angeles, New York, Florida, and 
Oregon. Nabut purchases the chemical for approximately $220 per case, 
and he sells it for approximately $800-900 per case, and sometimes as 
high as $3600 per case. Nabut collects pseudoephedrine from various 
sources and distributes the chemical using UPS and other parcel service 
facilities, and also occasionally rental vans. The pseudoephedrine 
allegedly is distributed to retailers such as gift shops, and also to 
individuals not authorized to receive the chemical. The chemicals do 
not ever actually reach their purported destination, however, but are 
diverted through the organization to the illicit manufacture of 
methamphetamine. Nabut created false shipping and receiving records for 
the chemicals allegedly shipped to the retailers. These records were 
created for the specific purpose of deceiving DEA and other law 
enforcement agencies. Nabut has exported a 4-door Mercedes Benz 
automobile and approximately $1.5 million dollars to Jordan in

[[Page 9991]]

anticipation of fleeing the United States to avoid arrest.
    The Administrator finds the Confidential Source information 
provides substantial evidence that NAG and Nabut are in violation of 21 
U.S.C. 841(d)(1) (possession of a listed chemical with intent to 
manufacture a controlled substance); 841(d)(2) (possession/distribution 
of a listed chemical knowing or having reasonable cause to believe, 
that the listed chemical will be used to manufacture a controlled 
substance); 841(g)(1) (knowing distribution of a listed chemical in 
violation of the Controlled Substances Act); 841(g)(2) (possession of a 
listed chemical with knowledge that recordkeeping or reporting 
requirements not adhered to); 842(a)(5) and (10) (failure to keep 
required records). (Note: subparagraphs (d) and (g) have been 
redesignated as (c) and (f)). Therefore, the Administrator finds NAG 
and Nabut significantly violated applicable federal law.
    Regarding the third factor, any prior conviction record under 
Federal or State laws relating to controlled substances or chemicals, 
there is not evidence that NAG or Nabut has any record of convictions 
under Federal or State laws relating to controlled substances or 
chemicals.
    Regarding the fourth factor, past experience in the manufacture and 
distribution of chemicals, the Administrator finds NAG and Nabut 
significantly violated applicable law, as set forth in factor two 
above, and further, failed to adequately protect against the diversion 
of a substantial quantity of a List I chemical, as set forth in factor 
one, above.
    Regarding the fifth factor, such other factors relevant to and 
consistent with the public safety, the Administrator finds substantial 
evidence that NAG and Nabut significantly violated applicable law by 
actively participating in the diversion of pseudoephedrine to the 
manufacture of methamphetamine, and the falsification of records to 
conceal such activity. Furthermore, Nabut has fled the United States in 
anticipation of possible prosecution for his crimes.
    Accordingly, the Administrator of the Drug Enforcement 
Administration, pursuant to the authority vested in him by 21 U.S.C. 
823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that DEA 
Certificate of Registration 004407NAY, previously issued to North 
American Group, be, and it hereby is, revoked; and any pending 
applications for renewal or modification of such registration be, and 
hereby are, denied. This order is effective April 4, 2002.

    Dated: February 22, 2002.
Asa Hutchinson,
Administrator.

Certificate of Service

    This is to certify that the undersigned, on February 25, 2002, 
placed a copy of the Final Order referenced in the enclosed letter in 
the interoffice mail addressed to Linden Barber, Esq., Office of Chief 
Counsel, Drug Enforcement Administration, Washington, DC 20537; and 
caused a copy to be mailed, postage prepaid, registered return receipt 
to Mr. Hesham Nabut, North American Group, 2792 Michigan Avenue, Suite 
406, Kissimmee, Florida 34744.

Karen C. Grant.

[FR Doc. 02-5219 Filed 3-4-02; 8:45 am]
BILLING CODE 4410-09-M