Edmund Chein, M.D.; Revocation of Practitioner's Registration, Denial of Application for Exporter's Registration, 6580-6595 [E7-2217]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 72, Number 28 (Monday, February 12, 2007)]
[Notices]
[Pages 6580-6595]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2217]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket Nos. 02-09, 02-43]


Edmund Chein, M.D.; Revocation of Practitioner's Registration, 
Denial of Application for Exporter's Registration

Introduction and Procedural History

    This is a consolidated proceeding. On November 7, 2001, the then 
Administrator of the Drug Enforcement Administration, issued an Order 
to Show Cause and Notice of Immediate Suspension of the practitioner's 
Certificate of Registration, AC1643661, issued to Edmund Chein, M.D. 
(Respondent) of Palm Springs, California. The Notice of Immediate 
Suspension was based on the Administrator's preliminary conclusion that 
Respondent's continued registration constituted ``an imminent danger to 
the public health and safety because of the substantial likelihood that 
[Respondent would] continue exporting and diverting controlled 
substances.'' Order to Show Cause and Notice of Immediate Suspension at 
6 (2001 OSC). The Order further proposed to revoke Respondent's 
practitioner's registration and deny any pending applications for 
renewal of the registration on the ground that Respondent's continued 
registration would be inconsistent with the public interest. See id. at 
1; see also 21 U.S.C. 823(f) & 824(a)(4).
    Subsequently, on May 24, 2002, the Deputy Assistant Administrator, 
Office of Diversion Control, issued an additional Order to Show Cause 
(hereinafter 2002 OSC) to Respondent. This Show Cause Order proposed to 
deny Respondent's pending application for a registration as an exporter 
on the ground that issuance of a registration would be inconsistent 
with the public interest. 2002 OSC at 1; see also 21 U.S.C. 958(c) 
&(d); id. 823(d).
    The 2001 OSC alleged that Respondent had purchased ``large amounts 
of anabolic steroids'' from a Mexican pharmacy and ``other illegitimate 
sources'' and had distributed these substances to individuals who did 
not have a legitimate medical need for them. 2001 OSC at 2. The OSC 
further alleged that on May 28, 1996, Federal agents executed a search 
warrant at Respondent's medical office and seized several vials of 
steroids for which there were no records. Id. The OSC further alleged 
that in June 1996, DEA obtained from Henry Schein, Inc., copies of 
invoices which documented that Respondent had purchased controlled 
substances on nine different occasions between January 1995 and May 
1996. Id. at 3. The OSC alleged that Respondent had failed to keep 
accurate records of the purchase, inventory, and dispensation of 
controlled substances. Id.
    The 2001 OSC next alleged that on January 31, 2001, DEA Diversion 
Investigators (DIs) went to Respondent's Palm Springs medical office, 
the Palm Springs Life Extension Institute (hereinafter PSLEI), to 
conduct an administrative inspection. Id. The OSC alleged that the 
invoices documenting the purchases of controlled substances were at an 
accounting firm and not at the office. Id. The 2001 OSC further alleged 
that ``none of [the] required controlled substance records were 
accessible,'' because the records were stored in a computer and none of 
the office personnel then present were capable of retrieving them. Id. 
The OSC thus alleged that Respondent had violated the Controlled 
Substance Act by failing ``to maintain in a readily available 
condition'' initial and biennial inventory records, purchase invoices, 
and dispensing records. Id.
    The 2001 OSC further alleged that on February 5, 2001, DEA 
personnel returned to Respondent's office and obtained an inventory of 
controlled substances that was dated February 5, 2001, dispensing 
records for the period July 1, 2000, through February 1, 2001, and 
invoices for purchases of controlled substances from Barnes Wholesale, 
Inc., for the period January 1, 1999, through February 4, 2001. Id. The 
OSC also alleged that the dispensing records showed that between July 
1, 2000, and February 5, 2001, Respondent dispensed anabolic steroids, 
a Schedule III controlled substance, and phentermine, a Schedule IV 
controlled substance, to persons in Korea, Belgium, Indonesia, Canada, 
Japan, Spain, Germany, Switzerland, Mexico, England, and Hong Kong. Id. 
at 3-4.
    More specifically, the OSC alleged that Respondent had made 328 
illegal exports comprised of 20 exports of phentermine 30 mg., 58 
exports of phentermine 15 mg., 73 exports of testosterone gel 8 mg., 12 
exports of testosterone gel 100 mg., 50 exports of testosterone 
estradiol gel 4 mg, 113 exports of Depo testosterone 200 mg., and two 
exports of testosterone 50 mg.

[[Page 6581]]

Id. at 4. The OSC alleged that these exports were illegal because 
Respondent was not registered as an exporter, see 21 U.S.C. 957(a), and 
had failed to file the necessary declarations. See id. section 953(e); 
see also 2001 OSC at 4. The OSC also alleged that Respondent had failed 
to maintain proper records of the exports. See 2001 OSC at 4.
    The 2001 OSC alleged that upon discovering the exports, a DI 
contacted Dr. Darryl Garber, an associate of Respondent, who informed 
the DI that Respondent's clinic had patient records for each recipient 
of the shipments, that some of the recipients were seen at the clinic 
and others were seen by video conferencing, and that the controlled 
substances were shipped by Federal Express. See id. The OSC alleged 
that the DI instructed Dr. Garber that the shipments ``violated the 
Controlled Substances Act and must be stopped immediately,'' and that 
the DI subsequently faxed Dr. Garber the applicable provisions of the 
United States Code. Id.
    The 2001 OSC next alleged that on August 23, 2001, DEA personnel 
visited the PSLEI and conducted a management conference with 
Respondent. Id. The OSC alleged that during this meeting, the DI told 
Respondent that the required records ``were not readily retrievable on 
the date of the inspection[ ] as required'' by Federal law and that 
Respondent acknowledged that he had discussed his non-compliance with 
Dr. Garber. Id. at 5. The OSC alleged that during the conference, 
Respondent admitted that based on the records provided to DEA in 
February 2001, he ``had at least 150 exporting violations already on 
record.'' Id. The OSC further alleged that Respondent admitted that he 
had ``continued to export controlled substances'' notwithstanding the 
March 2001 warning that the shipments were illegal, and that he would 
continue to do so until he ``received written instructions from DEA.'' 
Id. The OSC also alleged that when DEA personnel requested that 
Respondent produce his controlled substance shipping records, 
Respondent refused to do so and invoked the Fifth Amendment. Id.
    The 2001 OSC alleged that on various dates following the August 
23rd, 2001 meeting, DEA personnel faxed Respondent the applicable 
provisions of the United States Code and instructed him that he was not 
authorized to either export or import controlled substances and ``must 
immediately cease'' all such activity. Id. Based on the above 
allegations, the Administrator made the preliminary finding that 
Respondent was ``responsible for the diversion of large quantities of 
controlled substances in violation of 21 U.S.C. 953, 957 and 958.'' Id. 
at 6. Concluding that there was a ``substantial likelihood that 
[Respondent would] continue exporting and diverting controlled 
substances,'' the Administrator ordered the immediate suspension of 
Respondent's practitioner's registration. Id.
    The 2002 OSC, which proposed the denial of Respondent's application 
for an exporter's registration, repeated many of the above allegations. 
In addition, the 2002 OSC alleged that on April 27, 2001, Respondent 
had applied for a registration as an exporter of Schedule III (non-
narcotic) and Schedule IV controlled substances and that DEA had 
received the application on May 7, 2001. 2002 OSC at 2. The OSC alleged 
that the ``application was not accepted for filing'' and that 
Respondent's filing fee had been refunded. Id. The OSC also alleged 
that on December 17, 2001, DEA received from Respondent an undated 
application for a registration to export controlled substances in 
Schedule III (non-narcotic) and Schedule IV. See id. at 3.
    The 2002 OSC further alleged that on March 13, 2002, DEA DIs 
executed an administrative inspection warrant at the PSLEI. See id. at 
3. The OSC alleged that during the inspection, the DIs seized samples 
of controlled substances for analysis and obtained copies of invoices, 
inventories, dispensing logs and patient records. Id. The OSC alleged 
that these records showed that notwithstanding the previous DEA 
warnings that his exports were illegal, Respondent had ``continued to 
dispense controlled substances * * * to overseas patients until 
November 14, 2001,'' the date he was served with the Notice of 
Immediate Suspension. Id. Finally, the OSC alleged that ``DEA reviewed 
the patient records of selected overseas patients and determined that 
[Respondent had] deviated from the appropriate standard of care for the 
dispensation of controlled substances.'' Id. The OSC thus concluded 
that Respondent had ``committed acts that would render the approval of 
[his] pending DEA export application to be inconsistent with the public 
interest.'' Id. at 3.
    Respondent timely requested a hearing on the allegations of each 
Show Cause Order; the cases were assigned to Administrative Law Judge 
(ALJ) Gail Randall. The hearing on the issues raised by the 2001 Show 
Cause Order was initially scheduled to begin on July 9, 2002, in 
Riverside, California. However, on June 6, 2002, the parties filed a 
joint motion to consolidate the cases and to continue the hearing. On 
June 13, 2002, the ALJ granted the motions. ALJ Decision at 2 (ALJ).
    The first stage of the hearing was held in Riverside, California, 
on January 28-31, and February 3-6, 2003. During this portion of the 
hearing, Respondent objected to DEA's proposed eliciting of testimony 
of an expert witness, Dr. Robert Zipser, on the issue of whether 
Respondent's dispensing practices were within the standard of care. 
Among other things, Respondent asserted that the proposed testimony 
related to an issue that was outside the subject matter jurisdiction of 
this Agency. While the ALJ overruled Respondent's objection, she 
granted Respondent leave to file an interlocutory appeal on the issue. 
The ALJ further barred Dr. Zipser from testifying about Respondent's 
dispensing practices until the interlocutory appeal was resolved.
    On June 23, 2003, the Acting Administrator denied Respondent's 
appeal. Thereafter, the second stage of the hearing was held in 
Arlington, Virginia, on September 9-10, 2003, and the final stage was 
held in Riverside on December 9 through 11, 2003.
    During the hearing, both parties called witnesses and introduced 
documentary evidence. Following the hearing, both parties submitted 
proposed findings, conclusion of law, and argument.
    On July 28, 2005, the ALJ issued her recommended decision. In that 
decision, the ALJ recommended that I revoke Respondent's practitioner's 
registration. ALJ at 82. The ALJ further recommended that I deny 
Respondent's application for an export registration. See id. Neither 
party filed exceptions.
    Thereafter, the ALJ forwarded the record to me for final agency 
action. On December 29, 2005, Respondent's counsel submitted a letter 
to me setting forth various ``issues for review, exception, appeal and 
judicial review,'' Resp. Ltr. at 1, and including as attachments copies 
of various filings and motions that were previously submitted during 
the course of this all too lengthy proceeding. To the extent 
Respondent's letter raises ``exceptions'' as that term is used in the 
Administrative Procedure Act, see 5 U.S.C. 557(c), it is out of 
time.\1\ See 21 CFR 1316.66(a) (requiring filing of exceptions 
``[w]ithin twenty days after the date upon which a party is served a 
copy of the report of the'' ALJ).
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    \1\ Respondent's letter does not specify which of the ALJ's 
findings of fact and conclusions of law he is excepting to. Nor does 
it provide ``a statement of supporting reasons for such exceptions, 
together with evidence of record * * * and citations of authorities 
relied upon.'' 21 CFR 1316.66(a).
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    Having carefully considered the record as a whole, I hereby issue 
this

[[Page 6582]]

final order. For the reasons set forth below, I concur with the ALJ's 
conclusion that Respondent's continued registration as a practitioner 
would be inconsistent with the public interest and therefore adopt the 
ALJ's recommendation that Respondent's registration should be revoked. 
I further concur with the ALJ's conclusion that granting Respondent's 
application for registration as an exporter would be inconsistent with 
the public interest and therefore adopt the ALJ's recommendation that 
the application be denied. I make the following findings.

Findings of Fact

    Respondent is a medical doctor and holds a license with the Medical 
Board of California. Gov. Exh. 3, at 1. Respondent graduated in 1980 
from the American University of the Caribbean School of Medicine and 
also holds a law degree. Id.; see also ALJ at 5. Respondent practices 
anti-aging medicine and is the owner of the Palm Springs Life Extension 
Institute (PSLEI). ALJ at 5-6.
    Respondent has developed a treatment protocol called Total Hormone 
Replacement Therapy and obtained various patents for it.\2\ See 
generally Resp. Exh. 1017. Respondent's practice involves using blood 
tests to determine the levels of various hormones in a person and 
prescribing various substances including hormones such as Human Growth 
Hormone and Estrogen to a patient based on the level of these hormones 
found in a healthy young adult. See generally id. Most significantly, 
as part of his treatment protocol, Respondent frequently prescribed and 
dispensed several controlled substances including testosterone in 
various formulations, a Schedule III anabolic steroid (see 21 CFR 
1308.13(f)), and phentermine, a Schedule IV stimulant. See 21 CFR 
1308.14(e). Respondent used the term ``adrenal extract'' for 
phentermine. See Gov. Exh. 117; Gov. Exh. 135.
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    \2\ To obtain a U.S. patent, Respondent was not required to 
demonstrate the safety or effectiveness of his protocol. See Gov. 
Exh. 138, at 4 (Manual of Patent Examining Procedure Sec.  2107.03).
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    Respondent holds a DEA Certificate of Registration as a 
practitioner, No. AC1643661, which authorizes him to dispense 
controlled substances in Schedules II, II-N, III, III-N, IV and V. Gov. 
Exh. 2. Respondent's registered location is 2825 Tahquitz Canyon 
Building A, Palm Springs, CA, 92262. Id.

The First Investigation

    Respondent first came to the attention of DEA in 1994, when a U.S. 
Food and Drug Administration (FDA) Special Agent (SA) contacted Robert 
Brasich, a Diversion Investigator assigned to the San Diego Field 
Division, seeking a person to assist in an undercover investigation of 
Respondent. Tr. 112. The FDA SA asked the DI whether he knew of any DEA 
SA who could pose as body builder and perform an undercover visit with 
Respondent. Id. at 118. The FDA SA told the DI that he had personally 
conducted an undercover meeting during which he told Respondent that he 
played rugby and wanted to increase his strength and endurance. Id. at 
120. At the end of the visit, Respondent's staff gave the FDA SA human 
growth hormone (HGH) and the FDA SA subsequently received shipments of 
HGH on several occasions.\3\ Id.; see also Gov. Exh. 35, at 23.
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    \3\ HGH is not a controlled substance. The facts surrounding 
this visit are related solely to provide context.
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    On October 17, 1994, another FDA SA also performed an undercover 
visit with Respondent. Id. at 24. This SA told Respondent that he had 
an injured disc, that he lifted weights, and that he wanted to increase 
his muscle mass, and that he had taken steroids previously ``but wanted 
a safer alternative.'' Id. at 25; see also Tr. at 121. According to an 
affidavit filed to obtain a search warrant, Respondent told the SA that 
``the problem with anabolic steroids in the past was their use without 
medical supervision, but they weren't bad if administered by a 
doctor.'' Gov. Ex. 35, at 25. At the end of the consultation, 
Respondent gave the SA prescriptions for various items including 
testosterone gel, a Schedule III controlled substance. Id. at 26. While 
Respondent obtained a blood sample, he issued the prescription for 
testosterone without obtaining the results. Id. at 26; see also Tr. at 
149.
    On March 17, 1995, a Customs SA performed an undercover visit with 
Respondent. The Customs SA told Respondent that he was a competitive 
powerlifter and used anadrol, an anabolic steroid, but that he wanted 
HGH because he had lost competitions ``to guys who [were] `on the 
juice.' '' Gov. Exh. 35, at 32. During the visit, Respondent told the 
SA that ``[a]fter 1990, the whole body-building industry had switched 
to natural testosterone, and the `new power lifting people use 
testosterone and HGH.' '' Id. Respondent also told the SA that the 
``most effective treatment for [his] goal would involve both [HGH] and 
natural testosterone administered through the skin by means of a patch 
or gel.'' Id. Respondent further told the SA that the ``testosterone 
would not show up in drug testing at competitions if [he] followed 
[Respondent's] instructions.'' Id. at 33. While Respondent drew blood 
from the SA during this visit to determine his testosterone and HGH 
levels, the results were not available by the end of the consultation. 
Id. at 33-34; see also Tr. at 149. Respondent nonetheless gave the SA 
prescriptions for various items including testosterone. Id. at 34.
    Moreover, Respondent gave the SA a letter entitled ``testosterone 
Replacement Therapy,'' which stated that the SA ``had been diagnosed 
with hypogonadism for which testosterone replacement therapy was 
required.'' Id. The letter further stated that all the testosterone 
prescriptions and refills would be filled by a pharmacy in Fairfax, 
Virginia, and that Respondent would send the SA's prescription directly 
to the pharmacy. Id. at 34-35.
    Finally, on July 20, 1995, a DEA SA conducted an undercover visit 
with Respondent. Id. The SA told Respondent that he was a powerlifter 
and was training to make the Olympic team. Id. Respondent told the SA 
that because he ``had not done a lot of steroids in the past,'' his 
``testosterone would be low which would provide a justification for 
prescribing testosterone.'' Id. at 36. Respondent drew blood from the 
SA, id. at 37, and told him that ``if the results came back low'' he 
would also ship him HGH. Id. at 36. Respondent also gave the SA ``a 
letter entitled `testosterone Replacement Therapy.' '' Id. at 37. The 
letter ``was identical in substance to the letter given to'' the 
Customs SA during the third undercover visit. Id. Thereafter, the same 
Fairfax, Virginia pharmacy mentioned in the letter Respondent gave the 
Customs SA sent 50 mg. of testosterone gel to the DEA SA. Id. at 38.
    Subsequently, on May 23, 1996, the FDA SA obtained a search warrant 
for the PSLEI. Id. at 2. Two DEA DIs participated in the execution of 
the search. Tr. at 130. During the search, controlled substances, which 
included testosterone gel, testosterone cypionate and nandrolone 
decanoate, were found on the premises. Id. at 132; Gov. Exh. 35, at 71. 
Moreover, while the CSA requires a registrant to maintain at his 
registered location purchase records, an inventory, and a dispensing 
log, see 21 CFR 1304.03 & 1304.04, no such records were found on the 
premises during the search. Tr. at 134. The investigation also 
determined that on numerous occasions between January 1, 1995, and June 
3, 1996, Respondent had purchased controlled substances including 
diazepam (Schedule IV) and various

[[Page 6583]]

anabolic steroids including deca-durabolin, nandrolone decanoate, and 
testosterone cypionate from Henry Schein, Inc. See Tr. 135, Gov. Exh. 
36.

The Second Investigation

    On June 29, 1998, the Medical Board of California initiated 
proceedings against Respondent which resulted in an administrative 
hearing before a state ALJ. Govt. Exh. 3, at 1; Gov. Exh. 125. In a 
decision dated December 27, 1999, the state ALJ issued a decision which 
proposed the revocation of Respondent's state medical license. Gov. 
Exh. 4, at 67. On January 19, 2000, the Medical Board's Division of 
Medical Quality entered an order adopting the ALJ's decision with an 
effective date of February 18, 2000.\4\ See id. at 32
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    \4\ Respondent, however, sought judicial review in the 
California state courts. On September 26, 2000, the Superior Court 
granted Respondent's petition in part and ordered the Medical Board 
to set aside its decision revoking Respondent's license and remanded 
the case for further proceedings; on November 9, 2000, a judgment to 
this effect was entered. See Gov. Exh. 4, at 25-26. On January 4, 
2001, the Medical Board subsequently vacated and set aside its 
decision. Id. at 1.
    Subsequently, on August 15, 2002, the Medical Board filed an 
additional accusation against Respondent which alleged thirteen 
grounds for discipline including incompetence, prescribing without 
medical indication, ``obtaining controlled substances by deceit, 
misrepresentation and subterfuge,'' ``dispensing controlled 
substances without proper privileges,'' and failing to maintain 
adequate controlled substance records. Govt. Exh. 124, at 18; see 
also id. at 10-11. This matter was still pending at the time the 
record closed. See ALJ at 15.
    Pursuant to 5 U.S.C. 556(e), I take official notice of the fact 
that on September 22, 2005, Respondent entered into a Stipulation 
Settlement and Disciplinary Order with the State of California, 
which became effective on March 16, 2006. See In the Matter of the 
Accusation Against: Edmund Chein, M.D., File No. 19-2000-107723, 
Decision at 1, Stipulated Settlement and Disciplinary Order at 14. I 
further note language in the stipulation asserting that it ``is 
intended to resolve'' not only California's disciplinary action but 
also ``any disciplinary action taken by another state or the federal 
government based on the conduct alleged in * * * In the Matter of 
Edmund Chein, M.D., Docket No. 02-9 and 02-43 pending before the 
United States Drug Enforcement Administration.'' Stipulated 
Settlement at 2-3. In accordance with the Administrative Procedure 
Act, publication of this order will be withheld for a fifteen day 
period in order to provide Respondent with ``an opportunity to show 
the contrary.'' 5 U.S.C. 556(e).
    The ALJ also found that on June 30, 1995, the Medical Board 
placed Respondent on probation for a three year period for false 
advertising and failing to obtain a fictitious name permit. See ALJ 
at 12-13.
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    On July 20, 2000, Respondent submitted an application to renew his 
practitioner's registration (DEA From 224a). Gov. Exh. 1, at 1. His 
California license having been revoked, Respondent gave the address of 
his proposed registered location as 201 South Main, Suite 900, Salt 
Lake City, UT 84111. Id. at 2; Gov. Exh. 18, at 1. Moreover, in 
response to a question on the application, Respondent indicated that 
his California license had been revoked but that his Utah license was 
``not affected.'' See Gov. Exh. 1, at 2.\5\ Because Respondent had 
indicated that California had revoked his license, the application was 
not automatically renewed but forwarded to the DEA Salt Lake City 
office and then to the DEA Riverside, California field office, for 
further investigation, where it was assigned to Diversion Investigator 
Doris DeSantis. Tr. at 216-17.
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    \5\ On March 5, 2001, DEA received from Respondent a letter 
which requested a modification of his registration back to 2825 
Tahquitz Canyon Way, Building A, Palm Springs, CA, 92262, because he 
had ``since * * * regained [his] California Medical License.'' Gov. 
Exh. 18.
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    No longer holding a valid California medical license, on or about 
February 16, 2000, Respondent sold the PSLEI to his sister Connie 
Chein, a board certified physician who practices obstetrics and 
gynecology in Beverly Hills, California. ALJ at 6-7. Dr. Connie Chein 
testified that she purchased PSLEI because under California law, ``you 
have to be a licensed physician to own a medical facility.'' Tr. 1087. 
The ALJ found that during this period, PSLEI was operated by Dr. Darryl 
Garber, an associate of Respondent. See ALJ at 13 (citing Tr. 1050). On 
or about December 20, 2000 (and following the Superior Court's granting 
of judgment setting aside the State Board's revocation order), Dr. 
Connie Chein sold the PSLEI back to Respondent. Id. at 7.\6\
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    \6\ Given the circumstances surrounding Respondent's sale of the 
clinic to his sister and her sale back to him, the transaction may 
well have been a sham. But the Government did not attempt to prove 
that it was.
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    Dr. Connie Chein holds a DEA Certificate of Registration as a 
practitioner, No. AC7093292, with a registered location in Beverly 
Hills, California. Gov. Exh. 43, at 8. On various occasions, PSLEI 
ordered controlled substances using Dr. Connie Chein's DEA 
registration. See Gov. Exh. 43, at 2-6; Gov. Exh. 17 (invoices ordering 
phentermine from Barnes Wholesale); Gov. Exh. 44(d), 44(g), 44(l), & 
45(a) (invoices for testosterone ordered from Amend Drug & Chemical 
Co., Inc.); Gov. Exh. 31 (Letter dated Dec. 17, 2001, from Marshall 
Gilbert, Administrator, PSLEI, to Spectrum Chemicals) (``Dr. Connie 
Chein is no longer with [PSLEI]. Dr. Darryl Garber is now in charge of 
ordering all controlled substance[s].'').
    During a December 13, 2001, interview with DEA Diversion 
Investigators (DIs) at which she was represented by counsel, Dr. Connie 
Chein stated that she never gave Respondent permission to use her DEA 
registration to order controlled substances for PSLEI. Gov. Exh. 28, at 
15. Moreover, Dr, Connie Chein stated that she never received 
controlled substances at her Beverly Hills registered location which 
were intended for PSLEI and was unaware of the fact that someone at 
PSLEI was using her DEA registration to order controlled substances for 
the clinic. Id. at 15-17, 19.
    At the hearing, Dr. Connie Chein testified that she never treated 
patients at PSLEI. Tr. 1092. When asked, however, as to whether she had 
ever prescribed or dispensed controlled substances for patients of the 
PSLEI, Dr. Connie Chein asserted the Fifth Amendment privilege against 
self-incrimination. Id. at 1093. Moreover, when asked whether she had 
ever ordered controlled substances for PSLEI, Dr. Connie Chein again 
invoked her Fifth Amendment privilege. Id. at 1094. Dr. Connie Chein 
also asserted her Fifth Amendment privilege when the Government 
attempted to question her regarding various invoices and purchase 
orders which used her DEA number and related documents. Tr. 1111-12; 
1116-19; 1121-36.
    The Government contends that notwithstanding Connie Chein's 
ownership, Respondent remained in charge of the Palm Springs Clinic 
during the period in which his state license was revoked. There is 
substantial evidence in the record that supports this contention.
    For example, on February 27, 2000, Respondent wrote an 
``Interoffice Memo'' directing the Oral/Growth Hormone Department to 
not ``ship any bottle to Japan, if the bottles do not appear clean to 
you, because the Japanese custom is extremely clean.'' Gov. Exh. 136, 
at 14. The memo further instructed that ``testosterone tubes frequently 
have adhesive that appears black to them'' and that ``it must be 
removed * * * before it can be shipped out.'' Id. The memo directed 
clinic employees to ``sign that you have read this letter/memo, and 
return it to my desk. From, Dr. Edmund Chein.'' Id. The memo also 
stated that if there were ``any questions about the quality or the 
product, you must let Charlie or Vanessa or me know, before'' shipping 
the products. Id. Respondent's secretary, who worked at PSLEI's Palm 
Springs, Cal. clinic, was Vanessa Koloen. Tr. 1331-36
    Thereafter, in an Interoffice Memo dated February 29, 2000, 
Respondent directed the Growth Hormone Department to ship phentermine 
to a patient in Japan. See Gov. 105, at 36.

[[Page 6584]]

Specifically, the Memo reads: ``Mandy, please ship one (1) bottle of 
phentermine to Ms. [K. H.] immediately.\7\ However, ship the oral 
hormone, phentermine to Yamamoto Medical Clinic, instead of to her home 
address.'' Id. Other documents in the record establish that Ms. Mandy 
Boriski was involved in the filling of orders for Respondent's patients 
and worked out of the Palm Springs, Cal. clinic. See Gov. Ex. 96, at 
32, 33, 34, 36, 38.
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    \7\ To protect patient privacy, patients will be referred to by 
their initials.
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    One of these documents is a July 14, 2000 memo from Ms. Boriski to 
Dr. S.K., a German patient. The memo, which used the clinic's Palm 
Springs, California address states: ``I have received your fax re: the 
order with the pharmacy. I am awaiting approval from Dr. Chein for me 
to send the prescriptions you requested. I apologize for the delay but 
I am unable to send anything without his approval.'' Gov. Exh. 96, at 
32 (emphasis added).
    The record also contains a December 13, 2000 e-mail from Bob Jones, 
a consultant and spokeperson for PSLEI to various employees of the 
Palms Springs location, which discussed missing testosterone shipments 
to a German citizen, R.D. The e-mail, which was copied to Respondent 
and his Secretary Vanessa Koloen, states: ``Per Dr. Chein please send 
duplicates of their last shipments of these items today.'' Gx. 107, at 
23. As these various documents indicate, Respondent was still the boss 
during the period in which his sister putatively owned the clinic and 
continued to direct the clinic's employees in the handling of 
controlled substances.
    It is acknowledged that during this period, Respondent sometimes 
used letterhead that referred to PSLEI's ``International Division'' and 
gave an address in Salt Lake City, Utah, and typically used a 
prescription form that included his Utah medical license number. But 
even if Respondent actually maintained a medical practice in Utah, his 
doing so does not exclude a finding that during this period, Respondent 
continued to direct his employees regarding the distribution of drugs 
from the clinic's Palm Springs, California location.\8\
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    \8\ Other documents support the conclusion that Respondent 
remained active in practicing medicine out of the Palm Springs, 
California location. On May 22, 2000, Respondent sent a letter by 
fax to Dr. S.K. Gov. Exh. 96, at 41. In this letter, Respondent 
advised Dr. S.K. that her mother was ``not too old for the program'' 
and that ``[s]he may want to be on the silver program, which is the 
basic hormone-balancing program without the growth hormone.'' Id. 
Significantly, while this document was not written on PSLEI's 
letterhead, Respondent used the clinic's Palm Springs fax number.
    The record also contains correspondence written by Respondent 
during this period on letterhead using the clinic's Palm Springs, 
Ca. address. See Gov. Exh. 94, at 8. In an October 6, 2000 letter, 
Respondent rendered medical advice to a Japanese clinic regarding 
patient M.I. See id. Subsequently, on October 13, 2000, Dr. Chein 
wrote this patient on PSLEI's Palm Springs, CA letterhead advising 
that there was a dispute between himself and the doctors at the 
Aoyama Medical Clinic. Id. at 6.
    Thereafter, on December 5, 2000, Respondent wrote a letter on 
the clinic's Palm Springs, Ca. letterhead notifying the patient that 
``starting from 9th November 2000 the relation between Aoyama Clinic 
and my Institute (Palm Springs Life Extension Institute, CA, U.S.A.) 
has come to an end.'' Id. at 5 (emphasis added). Respondent thus 
represented to others that he was the owner of the clinic during the 
period in which his sister putatively owned it. Moreover, the 
statement shows Respondent's continued involvement in the business 
affairs of the Palm Springs clinic.
---------------------------------------------------------------------------

    Indeed, in the case of patient N.K., a Japanese citizen, Respondent 
wrote a letter (dated October 11, 2000) to the patient on Palm Springs, 
California letterhead discussing the results of a ``hormonal screening 
panel test''; the letter also recommended that the patient take 
testosterone gel and Adrenal Extract (phentermine). Gov. Exh. 93, at 6. 
Respondent also prepared a form on ``Palm Spring Life Extension 
Institute, Utah'' letterhead, which prescribed numerous products 
including testosterone gel and phentermine (Adrenal Extract). Id. at 
13. Both documents were faxed on October 19, 2000, and bear initials 
showing that the same person faxed both documents. Compare id. at 6, 
with id. at 13. Subsequently, on November 22, 2000, the Palm Springs, 
California location dispensed testosterone gel to this patient. See 
Gov. Exh. 15, at 20.
    I further note that notwithstanding her putative ownership of the 
clinic, Respondent's sister could not provide DEA investigators with 
copies of the documents that transferred ownership. See ALJ at 20 (] 
74). Furthermore, Respondent's sister told DEA investigators that she 
had been out to the clinic's Palm Springs location once in five years. 
See id. The ALJ also found that Dr. Garber operated the clinic during 
this period. Id. at 13 (] 52). But during this period, Dr. Garber's 
registered location was at his residence and not at the clinic. Id. at 
21 (] 76). In any event, the ALJ's finding that Dr. Garber operated the 
clinic does not preclude the additional finding that Respondent 
continued to exercise control over the Palm Spring location's handling 
of controlled substances during the period in which his sister owned 
the clinic.
    The ALJ found that Respondent dispensed controlled substance from 
PSLEI while his California medical license was revoked. See ALJ at 13-
14, ] 52 (citing Tr. 827-29; Gov. Exh. 105, at 36, 45-46). I adopt this 
finding. As found above, a February 29, 2000 memo from Respondent 
directed an employee in the ``Growth Hormone Department'' to ``ship one 
(1) bottle of phentermine to [Ms. K. H., a Japanese patient] 
immediately.'' Gov. Exh. 105, at 36. See also id. at 45-46 (Feb. 29, 
2000 letter from Respondent to Ms. K. H.; ``due to your twenty pound 
weight gain, I will add phentermine adrenal hormone immediately.''). 
Moreover, as explained above, the evidence shows that Respondent 
dispensed testosterone Gel to patient N.K. from the Palm Springs 
location while his California medical license was revoked.
    The ALJ also found that ``on August 11, 2000, the Respondent, 
without a DEA registration entitling him to so act, sent controlled 
substances from PSLEI, International Division, in Salt Lake City, Utah, 
to Japan.'' See ALJ at 14, ] 53 (citing Gov. Exh. 105, at 39-42). I do 
not adopt this finding. While the documents which the ALJ relied on 
establish that HGH and ``oral hormones'' were to be shipped, they do 
not establish that the ``oral hormones'' included a controlled 
substance.
    The ALJ also made a finding that ``[s]ome of the shipments sent 
from PSLEI were mislabled to avoid disclosing that the package 
contained controlled substances.'' ALJ 57, ] 192. Relatedly, the 
Government argues that various documents ``reflect[ ] PSLEI's 
willingness to fraudulently misidentify shipments of drugs to mislead 
customs officials.'' Govt. Br. at 50, ] 98.
    The document cited by the ALJ does suggest that testosterone gel 
was labeled as `` `a Skin Cream' and as a `gift' for Customs purpose.'' 
Gov. Ex. 107, at 21. A subsequent e-mail, dated December 13, 2000, 
which was copied to Respondent, indicated that the substances had not 
been received and directed the Palm Springs staff to send a new 
shipment that day. Id. at 23. The e-mail further included ``guidelines 
for shipping to Germany'' from the patient's secretary, which stated 
that the goods should be declared as a ``sample'' with a value of ``$ 
5.00.'' Id. But while the invoice that accompanied the shipment 
declared its value at $5.00, it also clearly described the goods as 
``testosterone.'' Id. at 20. This document thus does not support the 
ALJ's finding.
    The Government also points to a September 8, 2000 fax from Ms. 
Boriski to a Belgian citizen informing him that his order for melatonin 
had been shipped and ``labeled as [a] Dietary supplement * * * per your 
request. I

[[Page 6585]]

hope this does eliminate any delay with customs.'' Gov. Ex. 91, at 22. 
However, melatonin is not a controlled substance and it is arguably 
accurate to describe it as a ``dietary supplement.'' Moreover, even if 
it was improper to declare it as a dietary supplement, this document 
does not establish that Respondent was aware of this practice, and a 
single document does not prove that it was the clinic's policy or 
practice to falsify customs declarations.
    Finally, the record contains a letter from Dr. S.K. ordering 
estradiol/testosterone creme and suggesting that ``it might be 
[declared as] a cosmetic product.'' Gov. Exh. 96, at 45a. The 
Government, however, produced no evidence showing that the clinic did, 
in fact, mislabel the shipment. Accordingly, the ALJ's finding is not 
supported by substantial evidence. See NLRB v. Columbian Enameling & 
Stamping Co., 306 U.S. 292, 300 (1939) (``Substantial evidence is more 
than a scintilla, and must do more than create a suspicion of the 
existence of the fact to be established.'').

The DEA On-Site Inspections and Their Aftermath

    As stated above, because Respondent's state license had been 
revoked, DI DeSantis was assigned to conduct an investigation regarding 
his renewal application. On January 31, 2001, the DI went to the PSLEI 
in Palm Springs to interview Respondent and inspect his recordkeeping. 
Tr. 263; Gov. Exh. 5. Respondent was not present. Tr. 264. The DI met 
with Dr. Darryl Garber and presented him with a Notice of Inspection. 
Gov. Exh. 5.
    The DI asked to see various records including invoices for the 
purchase of controlled substances, inventories, and dispensing logs. 
Tr. 268-69. Dr. Garber told the DI that he could not provide the 
records because PSLEI had a new computer system and no one was present 
who could access the records. Id. at 269. One of PSLEI's employees told 
the DI that the invoices were not on-site but rather were at the office 
of its accountant. Id. at 273. The only records the DI received were 
two purchase orders but these had been generated by the PSLEI and were 
not the invoices provided by the distributor. See Gov. Exh.6; Tr. 274-
75. The purchase orders did, however, establish that the PSLEI had 
recently bought phentermine. See Gov. Exh.6.
    The DI told Dr. Garber that the clinic was in violation of the 
CSA's implementing regulations because the invoices were required to be 
kept on-site. Tr. 274-76. The DI also informed Dr. Garber that the 
clinic was in violation because the records were not readily 
retrievable for inspection and copying. Id. at 274.
    On February 5, 2001, the DI returned to the PSLEI to obtain the 
records that the clinic was required to maintain. Once again, 
Respondent was not present. Id. at 279. The DI again met with Dr. 
Garber and asked for the records. Id. Dr. Garber asked the DI to sit in 
the office while he retrieved the records. Id. The DI waited two to 
three hours while Dr. Garber printed out the records. Id. at 280.
    Dr. Garber provided the DI with a one page inventory report which 
was dated February 5, 2001. See Gov. Exh. 8. Dr. Garber also provided 
the DI with four invoices for phentermine. Tr. 331-33; Gov. Exh. 17(a)-
17(d). Although the DI had requested the invoices for all controlled 
substances purchased by the clinic, no invoices for the purchase of 
testosterone were provided. Tr. 334.
    Dr. Garber also provided the DI with a dispensing log for various 
controlled substances including testosterone gel, testosterone 
estradiol gel, Subligual testosterone, testosterone, and depo 
testosterone. See Gov. Exhs. 9-16; Tr. 284. Most of the dispensing 
logs, however, only covered the period from July 1, 2000, through 
February 5, 2001.\9\ See Gov. Exhs. 9-16. Moreover, none of the logs 
indicated the name of the physician who had authorized each dispensing. 
See id. The logs also included the names of numerous patients who 
resided in foreign countries including Belgium, France, Germany, Great 
Britain, Spain, Switzerland, China (Hong Kong), Indonesia, Japan, South 
Korea, and Canada. See Gov. Exhs.10, 11, 12, 15, & 16. The Government 
subsequently compiled from these records a separate document which 
listed each dispensing. See Gov. Exh. 46. According to this document, 
the dispensing logs showed that Respondent's clinic exported controlled 
substances 317 times during the period from July 1, 2000, through 
February 5, 2001.\9\ See id.; see also ALJ at 57, ] 191. Neither 
Respondent nor Dr. Garber had an export registration as required under 
21 U.S.C. 957 & 958.\10\
    On March 9, 2001, DI DeSantis contacted Dr. Garber by telephone and 
told him that PSLEI must stop exporting controlled substances. Tr. 
1245. The DI also faxed to Dr. Garber various provisions of Federal law 
pertaining to the exporting of controlled substances including 21 
U.S.C. 953 & 960. Id.; see also Gov. Exh. 19. On the same day, Vanessa 
Koloen, a PSLEI employee, faxed to the DI copies of various documents 
including purchase orders and invoices related to the clinic's purchase 
of testosterone. See Gov. Exh. 20. The earliest documents were, 
however, dated November 20 & 21, 2000, see Gov. Exhs. 20(J) & 20(K), 
and the dispensing records indicated that testosterone had been 
dispensed before these dates. See, e.g., Gov. Exh. 15, at 21-26. Two 
other documents provided by PSLEI used Dr. Garber's residence as the 
billing and shipping address. See Gov. Exhs. 20(F) & 20(G). The 
remaining documents were for purchases that occurred in mid to late 
February 2001, following the DI's second visit. See Gov. Exhs. 20(a), 
20(b), 20(c), 20(d), 20(e).
---------------------------------------------------------------------------

    \9\ The dispensing log for phentermine 15 mg. covered the period 
from July 26, 1999, through February 1, 2001. See Gov. Exh. 10. This 
log, however, had no entries before August 22, 2000. See id. The 
dispensing log for Depo testosterone covered the period July 1, 
2000, through February 1, 2001. See Gov. Exh. 16.
    \10\ While Dr. Garber held a DEA practitioner's registration, at 
the time of the January 31 and February 5, 2001 visits, his 
registered location was his residence in Rancho Mirage, California. 
See ALJ at 21, ] 76. Dr. Garber did not change his registered 
location to the PSLEI until February 12, 2001, after the two visits. 
See id.
---------------------------------------------------------------------------

    Subsequently, on April 27, 2001, Respondent applied for a 
registration to export Schedule III Non-Narcotic and Schedule IV 
controlled substances. See Gov. Exh. 48, at 3-4. According to a date 
stamp, the application was received at DEA in May 7, 2001, and 
Respondent's credit card was charged on May 15, 2001. See id. at 3. The 
application, however, was never processed and the application fee was 
refunded through a credit to Respondent's credit card. Tr. 2092-94 The 
application bears the notation ``Already Have DEA.'' Gov. Exh. 
48, at 3. The application was not returned to Respondent, and no one at 
DEA ever notified him that the application had been rejected. See Gov. 
Exh. 34 & 39; see also Resp. Proposed Findings at 12 (] 94). In 
December 2001, Respondent submitted a second application for 
registration as an Exporter. See Gov. Exh. 48 at 7-8.
    On August 23, 2001, DI DeSantis (accompanied by another DI) 
returned to PSLEI to conduct a conference with Respondent regarding the 
violations that had been found during the inspection. Tr. 545-47. The 
DI told Respondent that the violations included the clinic's lack of 
readily retrievable records, its lack of a biennial inventory, and its 
exporting of controlled substances to persons residing in foreign 
countries without an export registration. Id. at 547-48, 559.
    During the meeting, Respondent produced the statutes that the DI 
had faxed to Dr. Garber and acknowledged that he had discussed the 
violations with Dr. Garber. Id. at 548. Respondent admitted that he did 
not have an

[[Page 6586]]

exporter's registration and claimed that under either 21 U.S.C. 
953(a)(3) or (a)(4) he could export without a registration because he 
was sending the controlled substances to another doctor, who was 
legally authorized to handle controlled substances. Tr. 551-55. The DI 
informed Respondent that he would still need an export permit under 21 
U.S.C. 953(a)(5). Id. at 554. These provisions, however, address the 
exportation of narcotic drugs and not the non-narcotic controlled 
substances (testosterone and phentermine) that Respondent was 
exporting. Rather, the export of these controlled substances is 
governed by 21 U.S.C. 953(e), which requires the filing of a 
declaration and documentary proof that the importation into the 
destination country is not illegal.\11\ Moreover, a registration is 
required to export both narcotic and non-narcotic controlled 
substances. See 21 U.S.C. 957 & 958.
---------------------------------------------------------------------------

    \11\ The record contains letters from the governments of Japan 
and Taiwan to Respondent's associate (Dr. Garber) establishing the 
illegality of PSLEI's exportation of phentermine to persons residing 
in these countries. In a December 11, 2001 letter, the Government of 
Japan notified Dr. Garber that ``[w]ith regard to the medicine 
containing phentermine, you must not send the medicine to your 
patient in Japan.'' Gov. Exh. 38(C) (Tab D) (Letter from Kaoru 
Misawa, Deputy Director, Compliance and Narcotics Division, 
Pharmaceutical and Food Safety Bureau, Ministry of Health, Labor, 
and Welfare of Japan, to Darryl J. Garber). According to this 
letter, a ``patient can import the medicine into Japan if he carries 
the medicine containing less than 1.125 grams of phentermine by 
himself when entering into Japan.'' Id. This letter further states 
that while the Government of Japan did not object to the exportation 
of testosterone gel to a patient in Japan, the medicine must be 
``for his personal use and of the amount within one-month['s] 
consumption.'' Id.
    In a January 4, 2002 letter, the Government of Taiwan informed 
Dr. Garber that ``phentermine * * * has been prohibited for use by 
the Department of Health since December 8, 1980, and is not allowed 
for importation.'' Gov. Exh. 38(C) (Tab E) (Letter, Kai-Yuan Tan, 
M.D., Director-General, Bureau of Medical Affairs, Department of 
Health, Taiwan, to Darryl J. Garber, M.D.).
    The record also contains a letter dated July 26, 2001 from Dr. 
Garber to Raymond A. Conner, Diversion Group Supervisor in DEA's 
Riverside, California, office. In this letter, Dr. Garber 
acknowledged that ``[i]n Japan and Korea it is against the law to 
prescribe Anabolic Steroids * * * and phentermine * * * for the 
purpose of Anti-Aging Medicine.'' Gov. Exh. 38(C) (Tab C).
---------------------------------------------------------------------------

    During the meeting Respondent did not mention that he had applied 
for an exporter's registration. Moreover, Respondent told the DI that 
he had continued to export controlled substances notwithstanding her 
earlier admonition to Dr. Garber to stop. Tr. 557. Respondent further 
admitted that there had probably been many more violations in the 
interim but that he would not stop until ``he received something in 
writing from'' the DEA. Id. at 558.
    The other DI asked Respondent how he was shipping the controlled 
substances overseas. Id. Respondent refused to answer and invoked his 
Fifth Amendment privilege against self-incrimination. Id. He also told 
the investigators that ``it was up to [DEA] to find out how he was 
shipping [the controlled substances] overseas.'' Id. at 559.
    During the meeting, Respondent provided the DI with several 
invoices for controlled substances. One of the invoices documented that 
on March 14, 2001, PSLEI had purchased five kilograms of micronized 
testosterone from Pharmacia and Upjohn and that the product was shipped 
to Dr. Garber's residence. See Gov. Exh. 21.5, at 2. At the time, 
Respondent owned PSLEI and Dr. Garber was no longer registered at his 
residence. Id.
    Respondent also provided the DI with an invoice from Farmacias 
Castaneda, a pharmacy located in Tijuana, Mexico. See Gov. Exh. 22, Tr. 
576. The invoice, which is dated June 26, 2001, indicated that the 
PSLEI had purchased 120 units of Depo testosterone and 40 units of 
Decadurabolin, two anabolic steroids and Schedule III controlled 
substances, from the Tijuana pharmacy. See Gov. Exh. 22. The pharmacy 
did not hold a DEA registration because DEA does not register foreign 
pharmacies or distributors. Tr. 573-74. Neither Respondent, nor Mr. 
Romero, the pharmacy's owner, was registered as an importer. See ALJ at 
60, ] 205 (citing Tr. 167 & 970); Gov. Exh. 2.
    On August 31, 2001, DI DeSantis sent an additional fax to 
Respondent which included copies of 21 U.S.C. 823, 952, 953, 954 and 
958. The ``Comments'' portion of the Cover Sheet included the following 
statement:

    I have attached all the registration requirements . * * * 
concerning applicants to import or export controlled substances. You 
are not currently registered with DEA as an exporter/importer (nor 
do you possess any permits to export issued by the Attorney 
General), thus you are not authorized to perform either activity. 
You must immediately cease all [activity] in these areas as 
previously instructed on 02/13/01 and 8/23/01 by D/I DeSantis.

Gov. Exh. 23, at 1. On September 5, 2001, DeSantis sent an additional 
fax that included a copy of 21 U.S.C. 957 (Persons required to 
register), which had been omitted from the previous fax. See Gov. Exh. 
24.
    On November 12, 2001, DI DeSantis along with other DEA personnel, 
served the first Order to Show Cause and Notice of Immediate 
Suspension. Tr. 591. Upon her arrival at the PSLEI, the DI was informed 
that Respondent was out of the country and was not expected to return 
for possibly two weeks. Id. at 592. The DI then met with Dr. Garber and 
asked for Respondent's DEA Certificate of Registration. Id. at 592. 
Neither Dr. Garber, nor Respondent's secretary, Vanessa Koloen, knew 
where the certificate was. Id. at 593.
    The DI also sought to seize the controlled substances on the 
premises. Id. Dr. Garber told the DI that Respondent ``had not 
purchased any controlled substances'' and that controlled substances at 
the clinic were purchased by him. Id. at 593-94. Dr. Garber refused to 
turn over the controlled substances. Id.
    The DI then requested to see the invoices for controlled substance 
purchases to verify Dr. Garber's statement. Id. at 594. Clinic 
personnel gave the DI various invoices. Id; see also Gov. Exh. 45. The 
first of these invoices documented that on March 26, 2001, PSLEI had 
purchased two kilograms of testosterone (which was received on March 
30, 2001) using Connie Chein's DEA number. See Gov. Exh. 45a. The next 
three invoices documented that on three dates in February and March 
2001 (Feb. 16 & 21, Mar. 13, 2001), PSLEI purchased various quantities 
of testosterone which was shipped to Dr. Garber's residence. See Gov. 
Exh. 45(b), (c), & (d). The first two of these invoices (the Mar. 14 
Pharmacia & Upjohn and the Feb. 16 Gallipot) did not have a DEA number. 
The third invoice (the Feb. 21 Gallipot) used Respondent's DEA number 
even though the controlled substances were shipped to Dr. Garber's 
residence. See Gov. Exh. 45(d), Gov. Exh. 2.
    Finally, the seventh invoice documents a March 2, 2001, purchase by 
Dr. Garber of testosterone from Paddock Laboratories, which was shipped 
to Dr. Garber's residence. See Gov. Exh. 45(g). Of note, the invoice 
gives the name ``Vanessa'' in the box which includes purchase order 
information; in the ``Ship To Party Address'' box, the invoice gives 
Dr. Garber's name followed on the next line with the notation ``c/o 
Angela Santana.'' Id. The invoice also includes the handwritten 
notation: ``Received by Angie 3/5/01.'' Id. Both these individuals were 
PSLEI employees. Tr. 598. There is no dispute that Respondent was the 
owner of the PSLEI when these four purchases were made.
    Thereafter, on three occasions between January and March 2002, the 
DI (accompanied by another DI) went to PSLEI to search through its 
trash. Tr. 686. During the February trash run, the DIs found 50 empty 
boxes for a testosterone product that had been

[[Page 6587]]

manufactured by Brovel, S.A., a Mexican firm. Tr. 709, Gov. Exh. 58. 
The DI subsequently had someone translate the boxes' label, which was 
written in Spanish. Tr. at 711. The label indicated that the 
testosterone was not for human consumption but rather for animal use. 
See Gov. Exh. 58, at 4; Tr. 711; see also Gov. Exh. 116, at 4 
(declaration of FDA Associate Chief Counsel James Smith).
    I do not, however, adopt the ALJ's finding that because 
``Respondent does not treat animals[,] * * * the records supports an 
inference that this non-human use testosterone was compounded into a 
testosterone gel which was dispensed to the Respondent's human 
patients.'' ALJ at 62. I acknowledge that the existence of the boxes 
does create a suspicion that the substances were dispensed to human 
patients. But the Government produced no additional evidence that PSLEI 
used this testosterone to create products that were dispensed to 
humans. Moreover, Respondent produced credible evidence that he 
performed research into the development of a more effective delivery 
system for testosterone. The Government did not foreclose the 
possibility that the testosterone was used for that purpose by 
producing evidence that the quantity represented by the boxes was in 
excess of what would be needed for research purposes. While this is a 
close call, it is the Government that bears the burden of proof on the 
issue, and I therefore conclude that the ALJ's finding is not supported 
by a preponderance of the evidence.
    During this trash run, the DIs also found a fax for an invoice 
documenting PSLEI's sale of various products to a resident of Japan. 
See Gov. Exh. 70. The invoice was dated October 17, 2001, and lists 
``Testosterone/estradiol Gel 20 ml.'' and ``Adrenal Extract 15 mg. 
 30'' as among the products sold. Id. As found above, PSLEI 
used the term ``Adrenal Extract'' for phentermine. Of further 
significance, the invoice establishes that PSLEI continued to export 
controlled substances following the August 23, 2001 conference and the 
August 31 and September 5, 2001 faxes which told Respondent to cease 
the exports.
    Another document found during this trash run bears the caption 
``HORMONE DEPARTMENT PRESCRIPTION SHEET.'' Gov. Exh. 73. The document, 
which is dated October 29, 2001, makes reference to a Japanese patient 
and instructs a PSLEI employee to ``Please ship Ms. [S.] a tube of 
female strength testosterone to Ginza at no charge, immediately.'' Id. 
The document is signed ``E. Chein, M.D.'' Id.
    Following a third trash run, see Gov. Exh. 121, DI DeSantis 
obtained an Administrative Inspection warrant which was executed at 
PSLEI on March 13, 2002. Tr. 721. During the inspection, DEA personnel 
asked for the biennial inventories that are required by DEA 
regulations. Id. at 759-60. The clinic did not have them, id. at 760, 
and instead provided the investigators with a document entitled 
``Instant Inventory Report.'' Gov. Exh. 82, at 7; Tr. at 760. DEA 
personnel also obtained dispensing logs and approximately 100 patient 
files for patients who lived outside the United States. Id. at 764 & 
811.
    The dispensing logs document hundreds of instances in which 
Respondent dispensed/exported controlled substances to residents of 
foreign countries. See, e.g, Gov. Exh. 84 (dispensing log for 
testosterone-estrogen (4mg.-50 mg. 20 ml.) covering period May 1, 2001, 
through December 31, 2001).\12\ Many of the dispensings/exports 
occurred following the August 23rd conference and the subsequent faxes. 
See id. at pp.1-15. Moreover, the log indicates that on November 13 and 
14, 2001, the day after service of the Notice of Immediate Suspension, 
Respondent dispensed/exported this controlled substance thirteen times. 
See id. at 3-4.
---------------------------------------------------------------------------

    \12\ The cover sheet of this document indicates that the period 
it covered was from ``11/30/01-5/1/01.'' Gov. Exh. 84. The document, 
however, also includes dispensings that occurred in December 2001. 
See id. at .5 & 1.
---------------------------------------------------------------------------

    The dispensing log for testosterone gel (0.8% 20 ml.) also 
documents that Respondent dispensed and/or exported following the 
service of the Notice of Immediate Suspension. See Gov. Exh. 87. Of 
note, Respondent dispensed to a Japanese patient on November 13, 2001, 
after service of the Notice of Immediate Suspension. See id. at 6.
    The dispensing log for phentermine 15 mg. likewise documents that 
Respondent made numerous dispensings and/or exports of this controlled 
substance to foreign patients. See generally Gov. Exh. 88. Moreover, it 
also documents that Respondent made several dispensing/ exports after 
service of the Notice of Immediate Suspension. See id. For example, on 
November 13, 2001, Respondent made eight dispensings to foreign 
patients, and on November 14, 2001, Respondent made five dispensings to 
foreign patients. See id. at 6-7. Furthermore, on November 27, 2001, 
Respondent dispensed to a New Jersey patient. See id. at 6.\13\ This 
dispensing occurred more than two weeks after service of the Notice of 
Immediate Suspension.
---------------------------------------------------------------------------

    \13\ Like the dispensing logs that were obtained in February 
2001, some of the logs also failed to contain the name of the 
dispensing physician. See Gov. Exh. 86, at pp. 1-29 (testosterone 
gel 8mg./ml., 20 ml.); Gov. Exh. 89, at 2-8 (phentermine 15 mg.).
---------------------------------------------------------------------------

    On October 3, 2002, an additional search warrant was executed at 
the PSLEI. Tr. 836. During the search, DEA investigators seized 
approximately 83 pill containers labeled as ``Adrenal Extract 15 mg,'' 
which held approximately 4300 pills, and 63 pill containers labeled as 
``Adrenal Extract 30mg,'' which held approximately 3150 pills. Gov. 
Exh. 135. The pills were sent to the DEA Southwest Regional Laboratory 
for analysis. See id. The lab determined that the pills contained 
phentermine HCL. See id.
    During the search, DEA also seized a variety of documents. Among 
them is the previously described ``Interoffice Memo'' from Respondent, 
which is dated February 27, 2000, and which directed PSLEI's oral/
growth hormone departments to ensure the cleanliness of the 
testosterone products that were shipped to Japan. Gov. Exh. 136, at 14.
    The investigators also obtained several other memos on PSLEI's 
letterhead that were written from ``Dr. Chein'' on March 6, April 14, 
and July 3, 2000, that discuss shipments to Japan and Taiwan. See id. 
at 11-13. The memos, however, are not signed and do not indicate 
whether the memo was created by Respondent or his sister.
    DEA also seized another memo, which is dated January 14, 2002, and 
which is signed ``Edmund Chein MD.'' Id. at 10. The memo stated that 
``[e]ffective January 15th, all medicines being shipped to Tokyo goes 
[sic] directly to the patient address, except for patients with the 
chart number LEI-Y.'' Id. The memo then directed that ``[a]ll medicines 
for the patients with the chart number LEI-Y will be shipped directly 
to the Osaka clinic address[.]'' Id. Finally, the memo directed that 
shipments for two patients should not be addressed ``as Ever young 
Technologies'' because the patients ``have to pay taxes on the 
shipments that are addressed to Ever young Technologies.'' Id. 
Respondent prepared this memo, which is signed as having been received 
by an employee, following the service of the Notice of Immediate 
Suspension.\14\
---------------------------------------------------------------------------

    \14\ Both the Government and Respondent elicited extensive 
expert testimony on whether Respondent's dispensing of testosterone 
and phentermine to six patients who resided in foreign countries was 
for a legitimate medical purpose and within the usual course of 
professional practice. In light of Respondent's flagrant and 
repeated violations of federal law, I conclude that it is not 
necessary to make any findings on this issue.

---------------------------------------------------------------------------

[[Page 6588]]

Discussion

Respondent's Challenges to the Proceeding

    In the course of this matter, Respondent filed numerous motions 
challenging various aspects of this proceeding. In light of my 
conclusion that there is no need to consider the expert testimony 
regarding Respondent's practices with respect to foreign patients, many 
of the issues raised in these motions are now moot. Respondent also 
filed motions seeking to dismiss various allegations or to bar the 
Government from introducing evidence on various issues. Upon reviewing 
the record, I am satisfied that the ALJ's rulings on these motions were 
correct and that further discussion is not warranted.
    One of the motions, however, challenges the integrity of this 
proceeding and therefore requires further discussion before proceeding 
to the merits. More specifically, Respondent alleges that the Office of 
Chief Counsel ``engaged in a pattern of unlawful and unethical 
misconduct in the instant proceeding mandating the disqualification of 
that office.'' Resp. Memorandum of Points and Authorities in Support of 
Respondent's Motion To Disqualify Office of Chief Counsel and Dismiss 
Administrative Proceeding at 1. The alleged ``pattern'' involves two 
statements in an affidavit prepared by an attorney in the Office of 
Chief Counsel and signed by a DEA employee which discussed the 
circumstances surrounding DEA's failure to process Respondent's 
application for an Exporter's Registration. Specifically, the employee 
stated that she was the acting unit chief of the registration unit when 
she signed the declaration (and was not), and that ``the reason why Dr. 
Chein obtained a refund of his registration fee was `unexplained,' '' 
Resp. Memo. at 1, when there was an explanation.
    Respondent argues that this amounts to the subornation of perjury 
and that it ``mandate[s] the disqualification of [the Office of Chief 
Counsel] and its replacement with * * * private counsel.'' Id. 
Respondent contends that this is so because ``[t]he Office of Chief 
Counsel shall defend, cover up and represent its own interests in 
relation to the felony perjury charge and it will also be called to 
t