[Federal Register Volume 80, Number 129 (Tuesday, July 7, 2015)]
[Notices]
[Pages 38696-38699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16561]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2011-N-0169]


Chung Po Liu; Denial of Hearing; Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is denying Chung

[[Page 38697]]

Po Liu's (Liu) request for a hearing and is issuing an order under the 
Federal Food, Drug, and Cosmetic Act (the FD&C Act) debarring Liu for 5 
years from importing articles of food or offering such articles for 
importation into the United States. FDA bases this order on a finding 
that Liu was convicted of a felony for conduct relating to the 
importation of an article of food into the United States. In 
determining the appropriateness and period of Liu's debarment, FDA has 
considered the relevant factors listed in the FD&C Act. Liu has failed 
to file with the Agency information and analysis sufficient to create a 
basis for a hearing concerning this action.

DATES: This order is effective July 7, 2015.

ADDRESSES: Submit applications for termination of debarment to the 
Division of Dockets Management Branch (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Julie Finegan, Office of Scientific 
Integrity, Food and Drug Administration, 10903 New Hampshire Ave., 
Silver Spring, MD 20993, 301-796-8618.

SUPPLEMENTARY INFORMATION: 

I. Background

    On August 26, 2010, Chung Po Liu pleaded guilty to the felony crime 
of entering honey, a food, into the commerce of the United States by 
means of a false statement, in violation of 18 U.S.C. 542 and 2. Liu 
admitted that he had caused his customs broker to declare Thailand to 
be the country of origin of one honey shipment, although the majority 
of the honey originated in China, and to declare the Philippines to be 
the country of origin of a second honey shipment, although the honey 
originated in China. Liu admitted that, in each instance, he had 
documents in his possession establishing that the honey originated in 
China, that the declaration of country of origin was false, and that he 
was without reasonable cause to believe it was true. Liu also admitted 
that the United States began requiring the deposit of estimated anti-
dumping duties of between 183 percent and 221 percent on all non-exempt 
honey of Chinese origin beginning in 2001. Liu did not deposit 
estimated anti-dumping duties for either of these two shipments of 
imported honey. Liu also pleaded guilty to the misdemeanor crime of 
introducing adulterated food into interstate commerce in violation of 
sections 301(a), 303(a)(1), and 402(a)(2)(C)(i) of the FD&C Act (21 
U.S.C. 331(a), 333(a)(1), and 342(a)(2)(C)(i)). Liu admitted that he 
had introduced honey that contained the unsafe food additive 
ciprofloxacin, an antibiotic, into interstate commerce. On December 20, 
2010, the U.S. District Court for the Western District of Washington 
entered a criminal judgment against Liu under his guilty plea.
    Section 306(b)(1)(C) of the FD&C Act (21 U.S.C. 335a(b)(1)(C)) 
authorizes FDA to debar a person from importing articles of food or 
offering food for importation into the United States based on a 
finding, under section 306(b)(3) of the FD&C Act, that the person was 
convicted of a felony for conduct relating to the importation of food 
into the United States. By letter dated April 25, 2011, in accordance 
with section 306(i) of the FD&C Act and 21 CFR 10.50(c)(20) and 
12.21(b), FDA, Office of Regulatory Affairs (ORA) notified Liu that the 
Agency proposed to debar him for 5 years from importing any articles of 
food or offering such articles for importation into the United States 
and offered an opportunity to request a hearing on the proposed order 
of debarment to resolve disputed issues of material fact. ORA advised 
Liu that a request for a hearing may not rest upon mere allegations or 
denials, but must present specific facts showing that there is a 
genuine and substantial issue of fact that requires a hearing.
    In a letter dated May 24, 2011, Liu requested a hearing on his 
proposed debarment. On June 11, 2011, Liu submitted materials in 
support of his hearing request. In these materials, which were 
submitted in accordance with 21 CFR 12.22, Liu acknowledges his felony 
conviction. However, he urges FDA not to exercise its authority to 
debar him based on that conviction. In the alternative, he argues that 
any debarment should be limited to the 1-year period of supervised 
release that the court ordered him to serve after his release from 
custody after serving his sentence of incarceration of 1 year and 1 
day.
    Under the authority delegated to him by the Commissioner of Food 
and Drugs, the Director of the Office of Scientific Integrity (the 
Director) has considered Liu's submission. FDA will grant a hearing 
only if the material submitted shows that there is a genuine and 
substantial issue of fact for resolution at the hearing. Hearings will 
not be granted on issues of policy or law, on mere allegations, 
denials, or general descriptions of positions and contentions, or on 
data and information insufficient to justify the factual determination 
urged (see 21 CFR 12.24(b)). Based on this review, the Director has 
concluded that Liu has failed to raise a genuine and substantial issue 
of fact for resolution at a hearing and that a hearing is not 
justified. Accordingly, Liu's request for a hearing is denied, and FDA 
is issuing this notice to explain the basis for this decision (see 21 
CFR 12.24(a) and 12.28).

II. Arguments

    Liu raises two primary arguments in support of his hearing request. 
Liu first contends generally that debarment is ``unwarranted in law and 
without justification by the facts in the case.'' He also urges that 
FDA should not debar him due to his advanced age and ill health, or, 
alternatively, that FDA should debar him for a time period of less than 
5 years, the debarment period proposed in the Notice of Opportunity for 
Hearing.
    Liu notes that, under section 306(b), the decision whether to debar 
him is committed to FDA's discretion, and that FDA is authorized to 
debar him ``as a result of conviction of certain crimes'' (June 21 
submission at 1). Indeed, section 306(b)(3) of the FD&C Act states that 
a person is subject to debarment if the person has been convicted of a 
felony for conduct relating to the importation into the United States 
of any food. Liu does not dispute that he was convicted of a felony 
crime in violation of 18 U.S.C. 542 and 2, or that his conviction was 
based on conduct relating to the importation of honey, a food. In the 
plea agreement Liu signed, which he does not now refute, he admitted 
that: (1) He entered or introduced, or attempted to enter or introduce, 
into the commerce of the United States, imported merchandise; (2) he 
did so by means of any fraudulent or false invoice, declaration, 
affidavit, letter, paper, or by means of any false statement, written 
or verbal; and (3) he was without reasonable cause to believe the truth 
of such statement or procured the making of any such false statement as 
to any matter material thereto without reasonable cause to believe the 
truth of such statement (Plea Agreement at 2). He further admitted that 
this conduct related to the importation of honey, a food (see, for 
example, Plea Agreement at 11-12, June 21 submission at 2-3). 
Accordingly, Liu is subject to debarment under section 306(b)(3) on the 
basis of that felony conviction.
    Since Liu's felony conviction for conduct relating to the 
importation into the United States of honey establishes a predicate 
from which FDA may choose to exercise its authority to debar him, Liu's 
June 21 submission in support of his request for a hearing attempts to 
raise factual issues concerning the

[[Page 38698]]

application of the factors in section 306(c)(3) that FDA is required to 
consider in determining the appropriateness and the period of 
debarment. These are the applicable criteria: (1) The nature and 
seriousness of any offense involved; (2) the nature and extent of 
management participation in any offense involved, whether corporate 
policies and practices encouraged the offense, including whether 
inadequate institutional controls contributed to the offense; (3) the 
nature and extent of voluntary steps to mitigate the impact on the 
public of any offense involved, including . . . full cooperation with 
any investigations (including the extent of disclosure to appropriate 
authorities of all wrongdoing) . . . and any other actions taken to 
substantially limit potential or actual adverse effects on the public 
health; (4) whether the extent to which changes in ownership, 
management, or operations have corrected the causes of any offense 
involved and provide reasonable assurances that the offense will not 
occur in the future; and (5) prior convictions under the FD&C Act or 
under other Acts involving matters within the jurisdiction of FDA.
    Significantly, the health and age of an individual subject to 
debarment are not included as factors relevant to FDA's exercise of the 
Agency's debarment authority. Although a defendant may sometimes argue 
that poor health and advanced age should be considered in mitigation of 
punishment, debarment under 21 U.S.C. 335a is not a punitive sanction. 
Instead it is remedial in purpose. (See DiCola v. FDA, 77 F.3d 504, 507 
(D.C. Cir. 1996) (permanent debarment of convicted individual is not 
punishment, but instead is a remedy to protect the integrity of the 
drug industry and public confidence in that industry); Bae v. Shalala, 
44 F.3d 489, 493 (7th Cir. 1995) (purpose of statute establishing 
debarment authority was to restore consumer confidence in generic drugs 
by eradicating widespread corruption in generic drug approval 
process).) In determining whether to debar Liu, as well as the length 
of a term of debarment, FDA acts to protect the public health and not 
to punish Liu. Because we are acting for this remedial, not punitive, 
purpose, Liu's arguments concerning his health and age are not relevant 
to this proceeding.
    I address each of the relevant factors in turn.

A. The Nature and Seriousness of the Offense

    Liu emphasizes that he was not convicted of the charge for which he 
was originally indicted, conspiracy to violate 18 U.S.C. 545 by 
conspiring to enter goods into the United States through false 
statement, and to smuggle goods. He urges that conviction under the 
original charge would have required proof that he acted ``knowingly and 
intentionally'' (June 21 submission at 3). He devotes much of his 
submission to his argument that he did not act ``knowingly and 
intentionally.'' According to Liu's June 21 submission, Liu's 
accomplices, Yong Xiang Yan, the owner of Changge Jixiang Bee Products, 
Ltd. of Henan China, and Boa Zhong Zhang, a vice-president and part 
owner of Changge, established a scheme to transship and import into the 
United States Chinese honey, using Indigo Distribution Corp. in the 
Philippines. He disclaims knowledge of the nature and extent of their 
operations (June 21 submission at 4).
    However, these allegations are not relevant. Liu's conviction was 
not for violating, or conspiring to violate, 18 U.S.C. 545. The offense 
that must be considered is his felony violation of 18 U.S.C. 542 and 2, 
which was based on Liu's causing the false declarations to be made even 
though he was without reasonable cause to believe the truth of such 
statements. Even in his June 21 submission, Liu expressly acknowledges 
that he had documents in his possession indicating that, as described 
in the Plea Agreement and as charged in the superseding information to 
which he pleaded guilty, two shipments of honey he imported actually 
originated in China (June 21 submission at 3). He leaves unchallenged 
the factual basis for his conviction: That, without reasonable cause to 
believe the truth of the statements, he caused his customs broker to 
falsely state that the shipments originated in Thailand (December 20, 
2006, shipment) and the Philippines (February 14, 2007, shipment). 
Although he dismisses these as a ``few emails . . . among many hundreds 
of documents relating to the importation of honey found in Mr. Liu's 
house'' (June 21 submission at 3), he fully admits that these 
communications were in his possession. Liu has raised no factual issue 
for resolution at a hearing concerning whether he acted without 
reasonable cause to believe the truth of the statements concerning 
where the honey was produced.
    We further note that the statement of facts, which Liu admitted in 
his plea agreement, provides additional information concerning his 
actions which demonstrate the financial motive behind this offense. Had 
Liu instructed his customs broker to declare the country of origin as 
China, he and his companies would have been responsible for anti-
dumping duties in the amount of 221 percent of the value of the honey 
(Plea Agreement at 11-12). Liu's misrepresentation was thus both 
material and meaningful in the imports process, and it could not have 
been lost on Liu how important the country of origin was in the context 
of the anti-dumping duties for Chinese honey.
    Finally, I note that Liu's conviction did not rest on a single 
false statement. Instead, he pleaded guilty to a superseding 
information that included false statements with respect to two separate 
entries of imported Chinese honey, 2 months apart. His conviction did 
not rest on a single isolated incident, but on a repeated violation.
    Therefore, it is undisputed that Liu was responsible for multiple 
material false statements that resulted in the avoidance of significant 
duties for the importation of two shipments of honey with a total 
declared value of $186,912. As such, I agree with ORA's evaluation of 
this consideration and find that the nature and seriousness of Liu's 
felony offense weighs strongly in favor of debarment.

B. The Nature and Extent of Management Participation in the Offense

    Next, I consider whether Liu's response raised specific facts 
showing that there is a genuine and substantial issue of fact that 
requires a hearing concerning the nature and extent of management 
participation in the offense, including whether corporate policies and 
practices encouraged the offense, and whether inadequate institutional 
controls contributed to the offense.
    In the Notice of Opportunity for a Hearing, ORA stated, ``As the 
owner of the importing companies, you were responsible for the accuracy 
of declarations made to United States customs officials. You were 
without reasonable cause to believe the truth of these declarations 
regarding the origins of the honey. Further, you directly profited from 
the domestic sale of the imported honey.''
    Liu has not challenged these statements, and all of the 
descriptions of Liu's actions in the June 21 submission show him to act 
alone, as the individual responsible for importing these two shipments 
of honey. I agree with ORA that, based upon these facts, the nature and 
extent of Liu's management participation in the offense weighs in favor 
of debarment.

[[Page 38699]]

C. The Nature and Extent of Voluntary Steps To Mitigate the Impact on 
the Public

    Next, I consider whether Liu has raised specific facts showing that 
there is a genuine and substantial issue of fact that requires a 
hearing concerning the nature and extent of voluntary steps to mitigate 
the impact of his offense on the public, including full cooperation 
with any investigations (including the extent of disclosure to 
appropriate authorities of all wrongdoing) and any other actions taken 
to substantially limit potential or actual adverse effects on the 
public health.
    In the Notice of Opportunity for a Hearing, ORA stated, ``You took 
no steps to mitigate the impact on the public of your actions.'' Liu 
has not challenged this statement. As such, I agree with ORA that the 
nature and extent of Liu's voluntary steps to mitigate the impact to 
the public weighs in favor of debarment.

D. The Impact of Changes in Ownership, Management, or Operations

    In the Notice of Opportunity for Hearing, ORA determined that this 
factor was not applicable for consideration. Liu has not challenged 
that determination.

E. Prior Convictions Under the FD&C Act or Related Acts

    In the Notice of Opportunity for Hearing, ORA acknowledged that the 
Agency was unaware of any prior convictions involving matters within 
the jurisdiction of FDA. The lack of previous violations of the FD&C 
Act or related statutes by Liu weighs against debarment.

III. Findings and Order

    The Director of the Office of Scientific Integrity, under section 
306(b)(3)(A) of the FD&C Act and under authority delegated to him, 
finds that Liu has been convicted of a felony for conduct relating to 
the importation of food into the United States. Accordingly, FDA may 
debar Liu from importing articles of food or offering such articles for 
import into the United States for a period of not more than 5 years.
    I have considered the arguments raised by Liu regarding the 
relevant factors listed in section 306(c)(3) of the FD&C Act and have 
determined that Liu has raised no genuine and substantial issues of 
fact that require resolution at an evidentiary hearing. I have 
considered the factors in section 306(c)(3) of the FD&C Act. The nature 
and seriousness of Liu's offense, Liu's management participation in the 
offense, and the lack of any voluntary steps to mitigate the impact of 
the offense weigh in favor of debarring. Although Liu appears to have 
no prior criminal convictions involving matters within the jurisdiction 
of FDA, that consideration does not counterbalance to a sufficient 
degree the remaining considerations to warrant decreasing the period of 
debarment. Of particular note is the nature and seriousness of the 
offense, in light of the volume of honey that was imported, the amount 
of duties that were avoided, and the fact that false statements were 
made with regard to two shipments of honey. I agree with ORA's proposed 
period of debarment and find that a debarment of 5 years is 
appropriate.
    As a result of the foregoing findings, Liu is debarred for a period 
of 5 years from importing articles of food or offering such articles 
for import into the United States, effective (see DATES). Under section 
301(cc) of the FD&C Act, the importing or offering for import into the 
United States of an article of food by, with the assistance of, or at 
the direction of Liu is a prohibited act.
    Any application by Liu for termination of debarment under section 
306(d) of the FD&C Act should be identified with Docket No. FDA-2011-N-
0169 and sent to the Division of Dockets Management Branch (see 
ADDRESSES). All such submissions are to be filed in four copies. The 
public availability of information in these submissions is governed by 
21 CFR 10.20(j). Publicly available submissions may be seen in the 
Division of Dockets Management Branch between 9 a.m. and 4 p.m., Monday 
through Friday. Persons with access to the Internet may obtain 
documents in the Docket at http://www.regulations.gov.

    Dated: June 25, 2015.
Nathan Doty,
Director, Office of Scientific Integrity.
[FR Doc. 2015-16561 Filed 7-6-15; 8:45 am]
BILLING CODE 4164-01-P