[Federal Register Volume 68, Number 68 (Wednesday, April 9, 2003)]
[Notices]
[Pages 17406-17407]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8591]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 02-27]


Island Wholesale, Inc., Denial of Application

    On October 5, 2001, the Deputy Assistant Administrator, Office of 
Division Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Island Wholesale, Incorporated (Respondent), 
proposing to deny its application, executed on March 31, 2000, for DEA 
Certificate of Registration as a distributor of the list I chemicals 
ephedrine and pseudoephedrine. The Order to Show Cause alleged that 
granting the Respondent's application would be inconsistent with the 
public interest as that term is used in 21 U.S.C. 823(h).
    The Order to Show Cause was delivered to the Respondent by 
certified mail, and the Respondent timely requested a hearing. However, 
after the matter was docketed before Administrative Law Judge Gail A. 
Randall (Judge Randall), and the Government submitted its Prehearing 
Statement, the Respondent, through its legal counsel, withdrew its 
opposition to the denial of its DEA application for registration. In 
response to the Respondent's request, Judge Randall also found that the 
Respondent had likewise withdrawn its request for hearing. Accordingly, 
on April 18, 2002, Judge Randall issued a Termination Order terminating 
all matters before her and the matter was subsequently transmitted to 
the Deputy Administrator for Final Agency Decision.
    In light of the withdrawal of its request for hearing, the Deputy 
Administrator finds that the Respondent has waived its hearing right. 
Aqui Enterprises, 67 FR 12576 (2002). After considering relevant 
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 Controlled Substances Act. 21 
U.S.C. 802(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.

[[Page 17407]]

    The Deputy Administrator's review of the investigative file reveals 
that the Respondent is a small candy distributor located in Brooklyn, 
New York. The Respondent is owned by Fouad Twaiti, and his brother, Ali 
Twaiti serves as its manager. As part of a pre-registration 
investigation, DEA Division Investigators met with Fouad and Ali Twaiti 
on May 12, 2000. Fouad Twaiti informed investigators that his firm had 
been in operation since early 2000, and further added that his firm had 
been approached by some of its customers who ask for list I chemical 
products. Upon request, Fouad Twaiti furnished DEA investigators with a 
customer list consisting of four business establishments.
    DEA investigators subsequently interviewed each of the owners and/
or managers comprising the customer list provided by Fouad Twaiti. Each 
of the listed establishments denied requesting list I chemical products 
from Fouad Twaiti, and three of the establishments denied engaging in 
the sale of any pseudoephedrine products.
    The investigative file further reveals that as part of its ongoing 
investigation of the Respondent, DEA investigators obtained bank 
records of an individual hereinafter referred to as ``M.A.'' In or 
around March 2000, M.A. was criminally charged in Newark, New Jersey, 
with unlawful distribution of a listed chemical, and in January 2001, 
M.A. purportedly signed a plea agreement on the charge. According to 
DEA's review of bank records, Ali Twaiti engaged in a transaction with 
MA for $54,000 on December 20, 1999. When M.A. was asked by law 
enforcement officials about the above transaction with Ali Twaiti, M.A. 
replied, ``that was for a candy deal.''
    Pursuant to 21 U.S.C. 823(h), the Deputy Administrator may deny an 
application for DEA Certificate of Registration if he determines that 
granting the registration would be inconsistent with the public 
interest as determined under that section. Section 823(h) requires the 
following factors be 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).
    The Deputy Administrator finds factors one, four, and five relevant 
to the Respondent's pending application.
    With respect to factor one, maintenance of effective controls 
against diversion, the Deputy Administrator finds evidence in the 
investigative file that the Respondent provided customer information to 
DEA investigators that later proved to be false. With the ever-present 
problem of listed chemical diversion, it is incumbent upon a potential 
registrant to provide reliable and accurate information regarding the 
immediate destination of these products, and thereby, reduce the 
opportunity for diversion. The Deputy Administrator finds the 
uncertainty surrounding Respondent's customers is relevant under factor 
one and supports denial of Respondent's pending application for DEA 
registration.
    Regarding factor four, past experience in the manufacture and 
distribution of chemicals, the Deputy Administrator can find no 
evidence in the investigative file that Respondent, a small candy 
distributor, has any previous experience related to handling or 
distributing listed chemicals. This factor also weighs against the 
granting of Respondent's pending application. See, CHM Wholesale Co., 
67 FR 9985 (2002).
    With respect to factor five, such other factors relevant to and 
consistent with the public safety, the Deputy Administrator finds 
relevant that Respondent provided false information to DEA 
investigators when it provided a list of its purported customers. The 
Deputy Administrator finds this lack of candor makes questionable the 
Respondent and its owners' 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).
    On a related note, it is also unclear whether Fouad Twaiti provided 
a false statement to DEA investigators when he stated that the firm had 
been approached by customers requesting listed chemical products. Even 
if the statement regarding customer inquiries was true, there is 
insufficient information before the Deputy Administrator regarding the 
type of customers that requested these products, their identity and 
location, and whether they had a legitimate business interest in 
seeking the purchase of listed chemical products.
    The Deputy Administrator also finds relevant under factor five, the 
fact that Ali Twaiti engaged in a significant financial transaction 
with a purported diverter of list I chemicals. The apparent business 
connection between Respondent's ownership and an individual purportedly 
convicted of unlawful distribution of list I chemicals is troubling 
when one considers that the Respondent seeks a DEA Certificate of 
Registration to distribute these same products.
    The Deputy Administrator concludes that the Respondent cannot be 
entrusted with the responsibilities of a DEA registration. In light of 
the above, the Deputy Administrator further concludes that it would be 
inconsistent with the public interest to grant the application of the 
Respondent.
    Accordingly, the Deputy Administrator of the Drug Enforcement 
Administration, pursuant to the authority vested in him by 21 U.S.C. 
823 and 28 CFR 0.100(b) and 0.104, hereby orders that the pending 
application for DEA Certificate of Registration, previously submitted 
by Island Wholesale, Incorporated be, and it hereby is, denied. This 
order is effective May 9, 2003.

    Dated: March 26, 2003.
John B. Brown, III,
Deputy Administrator.
[FR Doc. 03-8591 Filed 4-8-03; 8:45 am]
BILLING CODE 4410-09-M