[Federal Register Volume 68, Number 18 (Tuesday, January 28, 2003)]
[Notices]
[Pages 4233-4238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1915]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


MDI Pharmaceuticals Revocation of Registration

    On September 24, 2001, the Administrator of the Drug Enforcement 
Administration (DEA), issued an Order to Show Cause and Immediate 
Suspension of Registration to MDI Pharmaceuticals (MDI) located in 
Dillon, Montana. MDI was notified of a preliminary finding that 
pursuant to evidence set forth therein, it was responsible for, inter 
alia, the diversion of large quantities of list I chemicals into other 
than legitimate channels. Based on his preliminary findings, and 
pursuant to 21 U.S.C. 824(d) and 21 CFR 1309.44(a), as well as the 
authority granted under 21 CFR 0.100, the Administrator ordered the 
immediate suspension of MDI's DEA Certificate of Registration, 
004629IEY, as a distributor of list I chemicals, effective immediately. 
The suspension was to remain in effect until a final determination was 
reached in these proceedings.
    The Order to Show Cause and Immediate Suspension further informed 
MDI of an opportunity to request a hearing to show cause as to why DEA 
should not revoke its DEA Certificate of Registration, and deny any 
pending applications for renewal or modification of that registration 
for reason that such registration is inconsistent with the public 
interest, as determined by 21 U.S.C. 823(h). MDI was also notified that 
should no request for hearing be filed within 30 days, its right to a 
hearing would be deemed waived.
    On September 26, 2001, a copy of the Order to Show Cause and 
Immediate Suspension was served upon MDI's owners by DEA Diversion 
Investigators. DEA has not received a request for hearing or any other 
reply from MDI or anyone purporting to represent the firm in this 
matter. Therefore, the Deputy Administrator, finding that (1) 30 days 
have passed since the receipt of the Order to Show Cause, and (2) no 
request for a hearing having been received, concludes that MDI is 
deemed to have waived its hearing right. After considering material 
from the investigative file in this matter, the Deputy Administrator 
now enters his final order without a hearing pursuant to 21 CFR 
1301.43(d) and (e) and 1301.46.
    The Deputy Administrator finds as follows: list I chemicals are 
those that may be used in the manufacture of a controlled substance in 
violation of the

[[Page 4234]]

Controlled Substances Act. 21 U.S.C. 801(34); 21 CFR 1310.02(a). 
Pseudoephedrine and ephedrine are list I chemicals that are 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 one 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 Deputy Administrator finds all parties mentioned 
herein to be regulated persons, and all transactions mentioned herein 
to regulated transactions, unless otherwise noted.
    The Deputy Administrator finds that on June 23, 1999, Isabelle 
DeLuce (Ms. DeLuce) submitted an application on behalf of MDI for 
registration with DEA as a distributor of list I chemicals. At the time 
of the submission of its application, MDI was a distributor of various 
non-chemical products such as vitamins, herbal products and novelty 
items. MDI was and is operated by Ms. DeLuce and her husband Michael 
Uzan (Mr. Uzan).
    On October 27, 1999, DEA Diversion Investigators conducted an on-
site pre-registration interview of Ms. DeLuce and Mr. Uzan at MDI's 
proposed registered location. During the interview, investigators 
warned MDI's owners about the diversion of ephedrine and 
pseudoephedrine to the illicit production of methamphetamine. The 
investigators also discussed DEA regulations pertaining to list I 
chemicals. Ms. DeLuce and Mr. Uzan informed the investigators that they 
understood the regulations and would comply with all laws pertaining to 
listed chemicals. Ms. DeLuce also informed investigators that she 
anticipated that listed chemicals would comprise only 20% of MDI's 
sales and that these products would be sold to convenience stores and 
gas stations located only in the State of Montana. Shortly thereafter, 
MDI was issued a DEA registration as a list I chemical distributor for 
ephedrine, phenylpropanolamine and pseudoephedrine.
    The Deputy Administrator finds that MDI has purchased listed 
chemicals from a DEA registrant that was the subject of a criminal 
investigation involving the mishandling of these products. A review of 
the investigative file reveals that on August 3, 2000, a Federal search 
warrant was executed at Wholesale Outlet at its location in Beaumont, 
Texas. At the time the warrant was executed, Wholesale Outlet was a 
DEA-registered distributor of list I chemicals. The issuance of the 
search warrant arose from an ongoing DEA investigation into Wholesale 
Outlet's listed chemical handling practices. Mediplas Innovations; 
Suspension of Shipments, 67 FR 41256, 41259 (2002). During the 
execution of the search warrant, law enforcement officers recovered, 
among other things, numerous invoices reflecting MDI's purchases of 
various products from Wholesale Outlet. Of note was MDI's purchase of 
$15,840 worth of single entity ``Twin Pseudo'' brand pseudoephedrine, 
60 mg. in 120-count bottles.
    Effective May 30, 2002, the Deputy Administrator sustained DEA's 
suspension of listed chemical shipments imported by a DEA registered 
importer and destined for sale to Wholesale Outlet. Mediplas at 41256, 
41264. Among the reasons cited for sustaining the suspensions was the 
pending criminal investigation involving Wholesale Outlet, including 
allegations of is suspected misconduct in the handling of list I 
chemicals, as well as a DEA audit which revealed Wholesale Outlet's 
failure to account for listed chemicals that it purchased, in violation 
of 21 U.S.C. 830(a) and 842(a)(10) and 21 CFR 1310.03 and 1310.06. 
Mediplas at 41263-64. Moreover, the Deputy Administrator found in 
sustaining the suspensions that pseduoephedrine products distributed by 
Wholesale Outlet (the same products purchased by MDI from the firm) 
were found at various clandestine locations throughout the United 
States and used in the illicit manufacture of methamphetamine.
    On August 17, 2000, a DEA Diversion Investigator requested that Ms. 
DeLuce provide a current customer/supplier list for listed chemicals. 
Ms. DeLuce informed the investigator that all but two of MDI's 72 
customers were located in Nevada, with the majority conducting business 
in the greater Las Vegas. After providing the requested list of 
suppliers, Ms. DeLuce stated that MDI purchased 50 to 70 cases of 
pseudoephedrine, 60 mg., in 120-count bottles, and twenty-two cases of 
pseudoephedrine, 60 mg. in 60-count bottles on a monthly basis.
    The Deputy Administrator's review of the investigative file further 
reveals that on or about November 30, 2000, Ms. DeLuce and Mr. Uzan 
were stopped in their automobile by the Las Vegas Police Department and 
issued a traffic citation. At the time of the traffic stop, the police 
officer noticed several cases of pseudoephedrine in the back seat of 
the vehicle. Ms. DeLuce and Mr. Uzan volunteered that they were 
distributing or selling pseudoephedrine to local businesses. On a 
subsequent occasion, Ms. DeLuce was again stopped in her vehicle by law 
enforcement officers while transporting quantities of pseudoephedrine. 
During this traffic stop, Ms. DeLuce provided a copy of her DEA 
registration and informed law enforcement officers that she was aware 
that pseudoephedrine could be diverted to the illicit manufacture of 
methamphetamine. During this traffic stop, Ms. DeLuce told the officers 
that she limited her sales to just one case per customer and that she 
sold pseudoephedrine to 50 clients about once a month in the greater 
Las Vegas area because she could not find enough customers in Montana.
    Pursuant to 21 CFR 1310.05(a)(1) DEA registrants are required to 
notify DEA in the event of any regulated transactions involving an 
extraordinary quantity, an uncommon method of payment or delivery, or 
any other circumstance that indicates that the listed chemical may be 
used unlawfully. The Deputy Administrator finds that the manner in 
which Ms. DeLuce and Mr. Uzan transported listed chemicals products in 
their automobile created a climate for diversion. Therefore, its 
failure to notify DEA of the uncommon means of transporting a listed 
chemical results in a finding that MDI, through the actions of its 
owners, was in violation of section 1310.05.
    On April 15, 2001, pursuant to an administrative subpoena, MDI 
produced its records for the purchase of pseudoephedrine between March 
2000 and October 2000. These records revealed that MDI purchased 
106,563 bottles of pseudoephedrine valued at $342,758.00 from four (4) 
different suppliers over that time period.
    MDI also produced its customer list for DEA inspection. A majority 
of the customers were located in Las Vegas, Nevada, and consisted 
primarily of gas stations, smoke shops, mini marts and other types of 
convenience stores. Included among MDI's list of customers was Mike's 
Smoke Shop, located at 2923 North Avenue in Grand Junction, Colorado. 
This establishment was owned by Mike Yako (Mr. Yako). During a follow-
up investigation on February 13, 2001, DEA special agents discovered 
that Mike's Smoke Shop had moved to its business location around July 
2000 but was evicted from that location in either August or September 
2000 for non-payment of rent. Further investigation revealed that 
during the

[[Page 4235]]

time this establishment conducted business, it maintained very little 
inventory.
    A subsequent review of MDI's sales records revealed that from July 
31 to November 16, 2000, the firm sold to Mike's Smoke Shop (2923 North 
Avenue location) approximately 65,650 tablets of pseudoephedrine. 
During a period of just under three months, MDI distributed an average 
of over 21,800 tablets per month to this small retailer of tobacco 
products. Many of the customer receipt documents for these transactions 
were signed by ``M. Yako'' or ``S. Issa.'' MDI continued its sale of 
pseudoephedrine products to Mike's Smoke Shop even after that 
establishment had closed. Many of these transactions took place within 
a week of one another. Given the nature of this purported business, the 
distribution of pseudoephedrine to this establishment was apparently in 
excess of legitimate demand. The Deputy Administrator finds that MDI 
failed to report to DEA the sale of an extraordinary quantity of listed 
chemicals and to verify the existence and validity of a business entity 
ordering listed chemicals, as required by 21 CFR 1310.05(a) and 
1310.07. Furthermore, MDI distributed a listed chemical to this 
establishment knowing or having reasonable cause to believe that the 
listed chemical would be used to manufacture illicit methamphetamine in 
violation of 21 U.S.C. 841(c)(2) (2001).
    On February 13, 2001, DEA special agents went to a second 
establishment under the name of Mike's Smoke Shop, located at 1010 \1/
2\ N. 5th St., Grand Junction, Colorado, also owned by Mr. Yako. While 
signs posted outside the establishment listed hours of operation, it 
appeared that the business had not been open for some time, DEA agents 
observed mail lying on the floor inside the door covered by dirt.
    Nevertheless, a subsequent review of sales records revealed that 
between August 9, 2000, and April 18, 2001, MDI sold 3312 bottles of 
120-count 60 mg. (397,400 tablets) pseudoephedrine to Mike's Smoke Shop 
at its 1010 \1/2\ North 5th Street location. During this eight-month 
period, MDI sold an average of 414 bottles or 49,680 tablets per month 
this small, retail smoke shop. As with the previous Mike's Smoke Shop 
location, many of the customer receipt documents for these transactions 
were signed by ``M. Yako'' or ``S. Issa.'' Given the nature of this 
purported business, the distribution of pseudoephedrine to this 
establishment was apparently in excess of legitimate demand. MDI again 
failed to report to DEA the sale of an extraordinary quantity of listed 
chemicals and to verify the existence and validity of a business entity 
ordering listed chemicals, as required by 21 CFR 1310.05(a) and 
1310.07. MDI also distributed a listed chemical to this establishment 
knowing or having reasonable cause to believe that the listed chemical 
would be used to manufacture illicit methamphetamine in violation of 21 
U.S.C. 841(c)(2) (2001).
    MDI also listed as a customer Paradise Smoker, also located in 
Grand Junction Colorado, and purportedly owned by an individual by the 
name of Samer Issa. When DEA special agents sought to verify the 
existence of the business, they were unable to locate it. Nevertheless, 
a review of MDI's shipment records revealed that between August 10, 
2000 and November 16, 2001, the firm sold approximately 190,080 
pseudoephedrine tablets to this small retailer of tobacco products. As 
with the Mike's Smoke Shop locations, many of the customer receipts 
were signed on behalf of Paradise Smoker by ``M. Yako'' or ``S. Issa.'' 
Given the nature of this purported business, the distribution of 
pseudoephedrine to this establishment was far in excess of legitimate 
demand. Therefore, with respect to regulated transactions involving 
Paradise Smoker, the Deputy Administrator finds that MDI failed to 
report to DEA the sale of an extraordinary quantity of listed chemicals 
and to verify the existence and validity of a business entity ordering 
listed chemicals, as required by 21 CFR 1310.05(a) and 1310.07. MDI 
also distributed a listed chemical knowing or having reasonable cause 
to believe that the listed chemical would be used to manufacture 
illicit methamphetamine in violation of 21 U.S.C. 841(c)(2) (2001).
    On February 13, 2001, DEA Special Agents interviewed an employee of 
one of MDI's retail customers, Special Smoke Shop of Delta, Colorado. 
This small retailer of tobacco products was purportedly owned by Suhail 
Issa. The employee informed investigators that tobacco products were 
the only products sold in the store that its owner ordered boxes of 
goods, which were paid for by money orders. The employee also revealed 
that the inventory of these boxes was never sold from the store; 
rather, the owner removed these boxes as soon as they were delivered to 
the store.
    DEA's review of sales records revealed that MDI sold approximately 
3,600 bottles of 120-count 60 mg. (432,000 tablets) pseudoephedrine to 
Special Smoke Shop between August 10, 2000 and April 18, 2001. During 
this eight-month period, MDI sold an average of 450 bottles (or 54,000 
tablets) per month to this establishment. Again, several of the 
customer receipt documents showed that they were signed on behalf of 
this customer by ``M. Yako'' and ``S. Issa.'' Given the nature of this 
purported business, MDI's distribution of pseudoephedrine to this 
establishment was far in excess of legitimate demand. Therefore, with 
respect to regulated transactions involving Special Smoke Shop, the 
Deputy Administrator finds that MDI failed to report to DEA the sale of 
an extraordinary quantity of listed chemicals and to verify the 
existence and validity of a business entity ordering listed chemicals, 
as required by 21 CFR 1310.05(a) and 1310.07. MDI also distributed a 
listed chemical to this establishment knowing or having reasonable 
cause to believe that the listed chemical would be used to manufacture 
illicit methamphetamine in violation of 21 U.S.C. 841(c)(2)(2001).
    Shortly thereafter, a DEA Special Agent visited another MDI retail 
customer, Special Smoke (an apparent name variation of ``Special Smoke 
Shop''), located in Fruita, Colorado. Special Smoke was also a retailer 
of tobacco products and purportedly owned by Suhail Issa. The Special 
Agent, posing as a customer, noticed that two bottles of 
pseudoephedrine were displayed in the store along with a sign that 
read, ``Limit three (3) per purchase.'' A subsequent review of MDI 
sales records revealed that between January 4, 2000 and April 13, 2001, 
the company sold 3312 bottles of 120-count 60 mg. (397,440 tablets) 
pseudoephedrine to Special Smoke. Some of these transactions took place 
within two to five days of one another.
    In addition, several of the customer receipt documents showed that 
they were signed by ``M. Yako'' and ``S. Issa'' as well as by other 
persons associated with the Mike's Smoke Shop locations, Paradise Smoke 
and Special Smoke Shop. Given the nature of this purported business, 
the distribution of pseudoephedrine to this establishment was far in 
excess of legitimate demand. Therefore, with respect to regulated 
transactions involving Special Smoke Shop, the Deputy Administrator 
finds that MDI failed to report to DEA the sale of an extraordinary 
quantity of listed chemicals and to verify the existence and validity 
of a business entity ordering listed chemicals, as required by 21 CFR 
1310.05(a) and 1310.07. MDI also distributed a sited chemical knowing 
or having reasonable cause to believe that the listed chemical would be 
used to manufacture illicit methamphetamine in violation of 21 U.S.C. 
841(c)(2) (2001).

[[Page 4236]]

    The Deputy Administrator's review of the investigative file reveals 
that pseudoephedrine products distributed by MDI have been uncovered at 
numerous clandestine methamphetamine settings throughout the United 
States and/or discovered in the possession of individuals apparently 
involved in the illicit manufacture of methamphetamine. On February 20, 
2001, the Las Vegas Metropolitan Police Department (LVMPD) arrested 
three individuals in an apartment complex in response to a small fire 
in their unit. At the time of the arrest, LVMPD officers discovered a 
methamphetamine laboratory inside the apartment. Numerous items 
associated with the illicit manufacture of methamphetamine were also 
recovered from the apartment, including three empty 120-count bottles 
of MDI brand 60mg. pseudoephedrine tablets.
    On April 4, 2001, two individuals were arrested by the LVMPD when a 
search of a residence revealed items associated with the illicit 
manufacture of methamphetamine, including twenty 120-count bottles of 
MDI brand 60mg. pseudoephedrine tablets. The investigative file further 
reveals that from April 16 to August 8, 2001, there were approximately 
thirteen additional seizures of MDI brand pseudoephedrine products at 
various clandestine laboratory settings. These seizures occurred 
primarily in the Las Vegas area, as well as at locations in Colorado 
and California.
    The Deputy Administrator finds that on February 22, 2001, the 
Federal Express office in St. George, Utah received six cases of 
pseudoepedrine which were shipped by MDI purportedly to six different 
business locations; however, all six cases were picked up by one person 
in a vehicle registered to Samar Issa. Business records for the city of 
St. George had no current information for three of the business 
entities. Business licenses for the other three businesses were issued 
to Marogy Marogy (later determined to be Samer Issa's brother-in-law), 
Mike Yako and a ``Suhel Aesa.''
    On March 14, 2001, a DEA Task Force Officer (TFO) acting in an 
undercover capacity met with Mike Yako at a location in Las Vegas, 
Nevada to arrange the purchase of a half case of pseudoephedrine. After 
agreeing to a price for half a case of pseudoephedrine, Mr. Yako was 
observed by law enforcement officers going into a storage unit, where 
he later emerged carrying a brown box which he placed in the trunk of 
his car. Mr. Yako then removed from the car trunk a bottle of MDI brand 
pseudoephedrine, which he handed to the TFO. Yako then stated to the 
TFO that MDI brand ``is doing so well'' his store put their own labels 
on the bottles. Mr. Yako then accepted from the undercover TFO $2,000 
cash for 72 bottles of MDI pseudoephedrine tablets. During an April 3, 
2001 undercover operation, the TFO stated his intentions to purchase 
five cases of pseudoephedrine from Mr. Yako in the near future, to 
which Mr. Yako replied, ``no problem.''
    On March 18, 2001, a Colorado State Trooper made a traffic stop of 
a vehicle driven by Suhail Issa, who was accompanied by Mike Yako. Mr. 
Yako informed the trooper that he was visiting Colorado to oversee 
``smoke shop'' stores that he owned in the state. He further stated 
that the two were on their way to Las Vegas, and had planned a 
temporary stop in Fruita, Colorado, to purchase gasoline for the 
vehicle they were driving. After obtaining permission to search the 
vehicle, the trooper found three boxes of pseudoephedrine. Contained 
within the three boxes were Federal Express shipping labels dated April 
16, 2001, and invoices from MDI to Special Smoke locations in Fruita, 
Grand Junction, and Delta, Colorado. Mike Yako explained that the three 
boxes were ``stuff for my business.'' The trooper seized the three 
boxes, but did not arrest the two passengers.
    On May 24, 2001, Diversion Investigators visited Ms. DeLuce and Mr. 
Uzan at their residence in Dillon, Montana. DEA personnel discussed 
with Ms. DeLuce and Mr. Uzan information regarding MDI pseudoephedrine 
products that were found at various clandestine methamphetamine 
settings. In response, Ms. DeLuce explained that she limits her 
customers to only two cases per month and that she sells 
pseudoephedrine in bottles rather than in blister packs because her 
customers prefer bottles. She also stated that she had 137 customers, 
most of who were located in Las Vegas.
    DEA also discussed with Ms. DeLuce the above referenced traffic 
stop of Suhail Issa and Mile Yako by the Colorado State Police. Ms. 
DeLuce acknowledged that these individuals were customers of MDI, and 
that she had been informed of the traffic stop. Ms. DeLuce also stated 
that she thought the two customers fabricated the story about the 
seizure in order to obtain more pseudoephedrine from MDI. Ms. DeLuce 
further added that despite her suspicions regarding the circumstances 
of traffic stop and the fact that the two customers were transporting 
pseudoephedrine products in the trunk of an automobile, she failed to 
report these matters to DEA as a suspicious transactions. Ms. DeLuce 
explained that she did not report the incident because she believed DEA 
was already aware of the seizure.
    Despite her representations to DEA personnel, the Deputy 
Administrator finds that information previously communicated to Ms. 
DeLuce regarding the traffic stop of her customers, and their being 
found in possession of caseload quantities of pseudoephedrine which 
were later seized, should have raised red flags that these products 
were being diverted to illicit uses. Ms. DeLuce admitted that the 
circumstances surrounding the traffic stop were suspicious. As a 
registrant entrusted with securing a product that is frequently 
diverted to illicit uses, MDI was required to notify DEA of the 
suspicious circumstances surrounding the traffic stop of its customers 
pursuant to 21 CFR 1310.05(a).
    The investigative file further reveals that Ms. DeLuce and Mr. Uzan 
informed DEA personnel that because of the traffic stop involving 
Mister Issa and Yako, MDI suspended all sales of its products to any 
establishment in which these customers were affiliated. They further 
indicated that the ``smoke shop'' stores operated by Issa and Yako in 
Colorado had closed. However, DEA subsequently obtained Federal Express 
records which showed that on at least thirty-nine separate occasions 
following the traffic stop by the Colorado State Police, MDI continued 
its shipment of caseload quantities of pseudoephedrine to business 
establishments operate by Suhail Issa and/or Mike Yako. Included among 
these transactions were numerous shipments of listed chemicals to 
``smoke shops'' in Colorado. At least three of the transactions 
occurred after Ms. DeLuce assured DEA personnel that MDI no longer sold 
listed chemicals to these customers.
    A further review of the investigative file reveals that MDI shipped 
pseudoephedrine products to a customer in St. George, Utah. Ms. DeLuce 
informed DEA personnel that MDI later determined that the customer was 
operating from a fictitious address. However, Ms. DeLuce admitted that 
MDI failed to report this suspicious transaction, as required by 21 CFR 
1310.05(a)(1)
    The Administrator of DEA made a preliminary finding that MDI has 
been responsible for the diversion of large quantities of 
pseudoephedrine into other than legitimate channels, in violation of 21 
U.S.C. 830(b)(3) and 841(c0(2). The Administrator also found that 
despite MDI's awareness of

[[Page 4237]]

problems associated with pseudoepherdrine diversion, and laws 
pertaining to listed chemicals, the firm had continually and 
consistently violated DEA laws pertaining listed chemicals, thus 
resulting in large quantities of pseudoepherdrine being diverted to the 
illicit production of methamphetamine. Therefore, pursuant to 21 U.S.C. 
824(d), the Administrator of DEA issued an immediate suspension of 
MDI's DEA Certificate of Registration.
    As noted above, on September 26, 2001, DEA Diversion Investigators 
served the Order to Show Cause and Immediate Suspension on Ms. DeLuce 
at her residence in Dillon, Montana. On that same date, Ms. DeLuce and 
Mr. Uzan were arrested by DEA Special Agents and charged with offenses 
related to the unlawful distribution and possession of listed 
chemicals. At the time of her arrest, Ms. DeLuce agreed to answer 
questions regarding her sale of listed chemicals and customers who 
purchased these products from MDI.
    Ms. DeLuce informed DEA agents that she knew her products were 
being sold ``on the street.'' She further admitted that she knew Samer 
and Suhail Issa, as well as Fehmi Awad (Mr. Awad) were probably abusing 
pseudoephedrine (i.e., ``selling too much''). Ms. DeLuce further stated 
that she knew Mr. Awad was picking up pseudoephedrine products at four 
different stores, and Samer Issa was selling the products to illicit 
methamphetamine manufacturers for about a year. She further admitted 
knowing that certain customer accounts in Utah and Colorado where MDI 
shipped pseudoephedrine products were fronts for Samer Issa. Samer Issa 
reportedly set these stores up in the name of his brother as well as in 
the names of others.
    Ms. DeLuce further informed to DEA agents that she knew 
pseudoephedrine was a ``hot item'' in Las Vegas because of the 
methamphetamine problem, and that 97% of MDI's customers were in that 
area. She estimated that her company made a profit from the sale of 
pseudoephedrine of between $700,000 to $800,000 a year at approximately 
$1,000 per case. Ms. DeLuce also disclosed that Samer Issa informed her 
that a case of pseudoephedrine sold for approximately $4000.00 on the 
street. Despite suspicions that her customers were selling MDI 
pseudoephedrine products to illicit methamphetamine cooks, Ms. DeLuce 
said that she essentially closed her eyes and ignored the actions of 
her customers. She further admitted that it was hard to stop selling a 
product that sold for $1,000 a case.
    The Deputy Administrator's review of the investigative file reveals 
that on October 10, 2001, a Federal Grand Jury in the District of 
Nevada issued a twenty-nine count indictment against Ms. DeLuce, Mr. 
Uzan, as well as Samer and Suhail Issa, Fehmi Awad, Mike Yako, and two 
additional individuals. Among the charged offenses were conspiracy to 
distribute a listed chemical with knowledge or reasonable cause to 
believe it would be used to manufacture a controlled substance in 
violation of 21 U.S.C. 846 and 841(c)(2); possession of a listed 
chemical in violation of 21 U.S.C. 841(c)(2) and 18 U.S.C. 2; and 
unlawful use of a communication facility, namely telephones and 
telephone wires, in causing and facilitating the commission of a 
conspiracy, in violation of 21 U.S.C. 843(b). These matters are 
currently pending resolution.
    The Deputy Administrator finds that the above-cited evidence 
provides ample grounds for an immediate suspension pursuant to 21 
U.S.C. 824(d). These grounds also provide the basis for the revocation 
of MDI's DEA Certificate of Registration.
    Pursuant to 21 U.S.C. 824(a), the Deputy 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 experience in the manufacture and distribution of 
chemicals; and
    (5) Such other factors as are relevant to and consistent with the 
public health and safety.
    As with the public interest analysis for practitioners and 
pharmacies pursuant to subsection (f) of section 823, these factors are 
to be considered in the disjunctive; the Deputy Administrator may rely 
on any one or combination of factors 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 
denied. See, e.g. Energy Outlet, 64 FR 14269 (1999). See also Henry J. 
Schwartz, Jr., M.D. 54 FR 16422 (1989).
    With respect to factor one, maintenance of effective controls 
against diversion, the Deputy Administrator finds substantial evidence 
in the investigative file that MDI, through its owners Isabelle DeLuce 
and Michael Uzan, participated in the unlawful diversion of 
pseudoephedrine having reasonable cause to believe that it would be 
used to manufacture illicit methamphetamien. Ms. DeLuce and Mr. Uzan 
transported bottles of pseudoephedrine in the trunk of their automobile 
and distributed these products to gas stations, smoke shops, mini marts 
and other convenience stores in the vicinity of Las Vegas, Nevada, an 
area known for large numbers of seizures involving clandestine 
methamphetamine laboratories. DEA previously denied the application of 
a retail establishment that sought registration as a distributor of 
list I chemicals when it was found through ``past DEA investigations 
and experience'' that the primary source for diversion of listed 
chemicals in areas where the applicant sought to distribute, 
specifically in Las Vegas, Nevada, were mini marts and other types of 
convenience stores. Sinbad Distributing, 67 FR 10232, 10233 (2002). See 
e.g. K.V.M. Enterprises, 67 FR 70968 (2002) (denial of application 
based in part upon information developed by DEA that the applicant 
proposed to sell listed chemicals to gas stations, and the fact that 
these establishments in turn have sold listed chemical products to 
individuals engaged in the illicit manufacture of methamphetamine).
    Factor one is also relevant to MDI's distribution of large 
quantities of pseudoephedrine products to numerous establishments 
associated with Mike Yako and Saher Issa, despite knowledge on the part 
of Ms. DeLuce and Mr. Uzan that these establishments were fronts for 
obtaining listed chemicals for use in the illicit manufacture of 
methamphetamine. On numerous occasions, MDI failed to report to DEA the 
sale of an extraordinary quantity of listed chemicals or verify the 
existence and validity of a business entity ordering listed chemicals, 
as required by 21 CFR 1310.05(a) and 1310.07. MDI failed to notify DEA 
that its customer was stopped by law enforcement authorities, and had 
cases of pseudoephedrine taken from the trunk of an automobile which 
was seized. In addition, MDI failed to notify DEA that it had shipped 
pseudoephedrine products to a customer with a fictitious address.
    Regarding factor two, the investigative file reveals that MDI 
failed to comply with applicable Federal laws by not

[[Page 4238]]

reporting the sale of extraordinary quantities of listed chemicals or 
uncommon method of delviery; verify the existence and validity of 
business entities; and distributed listed chemicals with knowledge that 
they were being diverted, as set forth in factor one above. MDI also 
failed to make required reports of suspicious listed chemical 
transactions pursuant to 21 U.S.C. 830(b)(1)(A), in that the firm 
distributed large quantities of pseudoephedrine tablets to smoke shops 
and other convenience stores in quantities that apparently exceeded 
legitimate demand for these products.
    In addition, MDI's owners were notified by DEA Diversion 
Investigators of dangers surrounding the diversion of list I chemicals. 
Ms. DeLuce demonstrated her knowledge of this fact on several 
occasions, as evidenced by her statement to a law enforcement officer 
during a traffic stop that she was aware of the illicit uses of 
pseudoephedrine. Therefore, MDI's distribution of large quantities of 
pseudoephedrine to smoke shops and convenience stores were in violation 
of 21 U.S.C. 841(d)(2) (2001), since its owners, by their own 
admission, knew that these products were being diverted to the illicit 
manufacture of methamphetamine. See, e.g. Ace Wholesale & Trading Co., 
67 FR 12574, 12576 (2002).
    The Deputy Administrator also finds factor two applicable to MDI's 
failure to notify DEA of the circumstances surrounding the traffic stop 
of its customers in the State of Colorado, and the seizure of MDI 
pseudoephedrine products that were being transported in the customer's 
automobile. Factor two is also applicable to the criminal indictment by 
a Federal Grand Jury of Ms. DeLuce, Mr. Uzan, as well as several 
individuals who purchased pseudoephedrine products from MDI. These 
charges stem from allegations regarding the unlawful distribution and 
possession of listed chemicals, and are pending resolution.
    Notwithstanding the pending criminal charges facing its owners, 
with respect to factor three, there is no evidence in the investigative 
file that MDI, Ms. DeLuce or Mr. Uzan have any prior conviction record 
under Federal or State laws relating to controlled substances or 
chemicals.
    With respect to factor four, past experience in the manufacture and 
distribution of chemicals, the Deputy Administrator finds substantial 
evidence in the investigative file that Ms. DeLuce and Mr. Uzan failed 
to maintain adequate controls in distributing pseudoephedrine products, 
and actively participated in the unlawful trafficking of this listed 
chemical knowing that it was being diverted to the manufacture of 
methamphetamine, as set forth above under factors one and two.
    With respect to factor five, such other factors relevant to and 
consistent with the public safety, the Deputy Administrator finds 
substantial evidence in the investigative file that the owners of MDI 
cannot be entrusted with the responsibilities inherent in a DEA 
registration. Ms. DeLuce and Mr. Uzan distributed large quantities of 
pseudoephedrine to locations not typically associated with large-scale 
transactions involving these over-the-counter products (i.e., small 
retailers of tobacco products). DEA's has obtained information that MDI 
pseudoephedrine products have been found at numerous clandestine 
settings.
    In light of these events, the Deputy Administrator finds it 
particularly disturbing that MDI's owners were aware that their 
pseudoephedrine products were being diverted to illicit uses, but chose 
to ignore this fact, apparently in the interest of financial gain. Ms. 
DeLuce and Mr. Uzan were so cavalier and reckless in their quest for 
profit that they shipped caseloads quantities of pseudoephedrine 
tablets to non-existent business locations. Such conduct on the part of 
a DEA registrant is unacceptable, and lends further support to the 
revocation of a DEA Certificate of Registration.
    Ms. DeLuce also demonstrated a lack of candor in her dealings with 
DEA personnel. On May 24, 2001, Ms. DeLuce informed DEA Diversion 
Investigators that MDI limited its sale of pseudoephedrine to its 
customers to one case (or 144 bottles containing 120 tablets) per 
month. However, Ms. DeLuce's statements are not corroborated by DEA's 
investigative findings:
    The investigative file reveals that in October 2000, MDI sold 
caseload quantities of pseudoephedrine to Mike's Smoke Shop (2923 North 
Avenue location) on three occasions; in 2000, during the months of 
September, November and December, MDI sold caseload quantities to 
Mike's Smoke Shop (1010\1/2\ North 5th Street location) on three 
separate occasions. In March 2001, MDI shipped caseload quantities of 
pseudoephedrine to that same location on four occasions; in October 
2000, MDI sold caseload quantities of pseudoephedrine to Paradise 
Smoke, Special Smoke Shop and Special Smoke Shop on four separate 
occasions for each store. MDI also sold caseload quantities of 
pseudoephedrine to Special Smoke Shop on four occasions in March 2001, 
including two caseloads that were sent within two days of one another.
    Ms. DeLuce further informed DEA Diversion Investigators that MDI 
suspended all sales of pseudoephedrine products to any retail 
establishment affiliated with Suhail Issa and Mike Yako as a result of 
the aforementioned traffic stop in Colorado. She further represented 
that the smoke shop establishments operated by Suhail Issa and Mr. Yako 
in the State of Colorado had closed. Despite Ms. DeLuce's 
representations, DEA obtained information that MDI continued its sale 
of pseudoephedrine products to establishments operated by Suhail Issa 
and Mr. Yako in the State of Colorado following the March 18, 2001, 
traffic stop. At least three of the transactions took place after Ms. 
DeLuce provided assurances to DEA personnel that she had discontinued 
the sale of listed chemicals to Suhail Issa and Mr. Yako.
    The Deputy Administrator finds this lack of candor, taken together 
with the registrant's disregard of laws and regulations pertaining to a 
DEA registration to distribute listed chemicals, makes questionable MDI 
and its owners's commitment to the DEA statutory and regulatory 
requirements designed to protect the public from the diversion of 
listed chemicals. Seaside Pharmaceutical Co., 67 FR 12580 (2002); 
Aseel, Incorporated, Wholesale Division, 66 FR 35459 (2001); Terrence 
E. Murphy, M.D., 61 FR 2841 (1996).
    Accordingly, the Deputy 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, 0046291EY, previously issued to MDI 
Pharmaceuticals, be, and it hereby is, revoked. The Deputy 
Administrator further orders that any pending applications for renewal 
or modification of said registration be, and they hereby are, denied. 
This order is effective February 27, 2003.

    Dated: January 2, 2003.
John B. Brown, III,
Deputy Administrator.
[FR Doc. 03-1915 Filed 1-27-03; 8:45 am]
BILLING CODE 4410-09-M