[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