MB Wholesale, Inc.; Denial of Application, 71956-71959 [E7-24610]

Download as PDF mstockstill on PROD1PC66 with NOTICES 71956 Federal Register / Vol. 72, No. 243 / Wednesday, December 19, 2007 / Notices issued in the usual course of [his] professional practice, or for a legitimate medical purpose, in violation of 21 CFR 1306.04 and 21 U.S.C. 841(a).’’ Id. at 5. Respondent timely requested a hearing on the allegations. The matter was assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner, who conducted a hearing on March 27, 2007, in Tampa, Florida. On July 16, 2007, while the ALJ’s decision was still pending, the Government moved for summary disposition. The basis of the motion was that on April 17, 2007, the Florida Board of Medicine had issued a final order which indefinitely suspended Respondent’s state medical license and that because Respondent was no longer authorized to handle controlled substances under state law, he was not entitled to hold a DEA registration. Gov. Mot. for Summ. Disp. at 2. The Government supported its motion with a copy of the Florida Board’s order. See id. at Attachment. In his response to the motion, Respondent stated that he ‘‘does not, and cannot, dispute [the] assertion’’ that he ‘‘is no longer licensed to practice medicine in the State of Florida.’’ Respondent’s Resp. at 1. Respondent also acknowledged that ‘‘the Government’s motion * * * is well taken.’’ Id. On August 7, 2007, the ALJ issued her recommended decision. Finding that Respondent had ‘‘concede[d] that he is without state authority * * * to handle controlled substances * * * in Florida,’’ the ALJ concluded that there were no material facts in dispute. ALJ Dec. at 3. Noting that this Agency has consistently held that a practitioner ‘‘must be currently authorized to dispense controlled substances ‘in the course of professional practice,’ ’’ in order to hold a DEA registration, the ALJ granted the Government’s motion and recommended that Respondent’s registration be revoked. ALJ at 2–3 (quoting 21 U.S.C. 802(21)). The ALJ then forwarded the record to me for final agency action. Having considered the record in this matter, I adopt the ALJ’s recommended decision in its entirety. I find that although Respondent’s registrations expired on August 31, 2005, Respondent submitted timely renewal applications for each registration and therefore, his registrations remain in effect pending the issuance of this Final Order. See 5 U.S.C. 558(c); GX 1. I also find that effective on April 17, 2007, the Florida Board of Medicine issued a final order which indefinitely suspended Respondent’s medical license. See Gov. Mot. for Summ. Disp., Attachment at 1– VerDate Aug<31>2005 21:40 Dec 18, 2007 Jkt 214001 3. I therefore further find that Respondent is without authority under Florida law to dispense or otherwise handle controlled substances in the course of medical practice. Under the Controlled Substances Act (CSA), a practitioner must be currently authorized to handle controlled substances in ‘‘the jurisdiction in which he practices’’ in order to maintain a DEA registration. See 21 U.S.C. 802(21) (‘‘[t]he term ‘practitioner’ means a physician * * * licensed, registered, or otherwise permitted, by * * * the jurisdiction in which he practices * * * to distribute, dispense, [or] administer * * * a controlled substance in the course of professional practice’’). See also id. § 823(f) (‘‘The Attorney General shall register practitioners * * * if the applicant is authorized to dispense * * * controlled substances under the laws of the State in which he practices.’’). As these provisions make plain, possessing authority to dispense a controlled substance under the laws of the State in which a physician practices medicine is an essential condition for holding a DEA registration. Accordingly, DEA has repeatedly held that the CSA requires the revocation of a registration issued to a practitioner whose state license has been suspended or revoked. See Sheran Arden Yeates, 71 FR 39130, 39131 (2006); Dominick A. Ricci, 58 FR 51104, 51105 (1993); Bobby Watts, 53 FR 11919, 11920 (1988). See also 21 U.S.C. 824(a)(3)(authorizing the revocation of a registration ‘‘upon a finding that the registrant * * * has had his State license or registration suspended [or] revoked * * * and is no longer authorized by State law to engage in the * * * distribution [or] dispensing of controlled substances’’). Because Respondent’s Florida medical license has been indefinitely suspended, he is not entitled to maintain his DEA registrations. Order Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a), as well as 28 CFR 0.100(b) & 0.104, I hereby order that DEA Certificates of Registration, BC5048043 and BC7752024, issued to Richard Carino, M.D., be, and they hereby are, revoked. I further order that the pending applications of Richard Carino, M.D., for renewal or modification of each registration be, and they hereby are, denied. This order is effective January 18, 2008. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 Dated: December 7, 2007. Michele M. Leonhart, Deputy Administrator. [FR Doc. E7–24606 Filed 12–18–07; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Drug Enforcement Administration MB Wholesale, Inc.; Denial of Application On August 7, 2006, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, issued an Order to Show Cause to MB Wholesale, Inc. (Respondent), of Detroit, Michigan. The Show Cause Order proposed the denial of Respondent’s pending application to distribute the list I chemicals ephedrine and pseudoephedrine, on the ground that ‘‘its registration would be inconsistent with the public interest.’’ Show Cause Order at 1 (citing 21 U.S.C. 823(h)). The Show Cause Order specifically alleged that ‘‘on or about February 16, 2006, [Respondent], by Mohamed Mehanna, submitted an application for registration as a distributor of the list I chemicals ephedrine and pseudoephedrine,’’ and that the fees for incorporating Respondent ‘‘were paid by a check drawn’’ on the account of Mehanna Brothers Export Import, Inc. (Mehanna Brothers). Id. at 2. The Show Cause Order alleged that Mehanna Brothers was managed by Abed, Mohammed and Jack Mehanna, and that it held a DEA registration to distribute list I chemicals at the registered location of 14442 Michigan Avenue, Dearborn, Michigan.’’ Id. The Show Cause Order alleged that in January 2005, Mehanna Brothers had moved its business to 6711 Greenfield Road, Detroit, Michigan, and distributed list I chemicals from this location without a registration authorizing it to do so. Id. The Show Cause Order further alleged that on July 10, 2006, DEA issued an Order to Show Cause proposing the revocation of Mehanna Brothers’ registration based on this activity. Id. The Show Cause Order next alleged that on April 16, 2006, DEA investigators went to Respondent’s proposed registered location to conduct a pre-registration inspection and discovered that the facility was the same one that was used by Mehanna Brothers. Id. The Show Cause Order further alleged that on May 18, 2006, Abed Mehanna told DEA investigators that he was a co-owner of Respondent, that E:\FR\FM\19DEN1.SGM 19DEN1 Federal Register / Vol. 72, No. 243 / Wednesday, December 19, 2007 / Notices mstockstill on PROD1PC66 with NOTICES Respondent was operated by himself as well as his brothers Mohammed and Bilal, and that it ‘‘had the same convenience store customers as Mehanna Brothers.’’ Id. at 3. The Show Cause Order also alleged that a ‘‘review of [the] invoices provided by Mehanna Brothers indicated that the bulk of the product sold in dollar terms consisted of various forms of ephedrine products,’’ and that ‘‘[m]any of these records did not properly identify the strength, packaging, and quantity of the listed chemical.’’ Id. The Show Cause Order thus alleged that ‘‘Mehanna Brothers and its management did not properly carry out the recordkeeping responsibilities of a registrant.’’ Id. Finally, the Show Cause Order alleged that the ‘‘bulk of precursor products destined for illegal methamphetamine laboratories are diverted through nontraditional markets such as convenience stores, gas stations, and other small retail outlets.’’ Id. The Show Cause Order thus alleged that ‘‘[t]he ownership and management of MB intend to parallel Mehanna Brothers’’ practice of supplying inordinate amounts of listed chemical products to outlets which have no expectation of legitimate sales in the amounts that they are receiving, leading to the diversion of such products.’’ Id. On August 14, 2006, the Show Cause Order was served on Respondent by certified mail as evidenced by the signed return-receipt card. Thereafter, on September 7, 2006, Respondent requested a hearing. The matter was assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner, who ordered Respondent to file its pre-hearing statement no later than November 13, 2006. Order Terminating Proceedings at 1. Respondent did not, however, comply with the ALJ’s order. Accordingly, on November 27, 2006, the ALJ found that Respondent had waived its right to a hearing and ordered that the proceeding be terminated. On June 11, 2007, the case file was forwarded to this office for final agency action. Having considered the entire record in this matter, I adopt the ALJ’s finding that Respondent has waived its right to a hearing. See 21 CFR 1309.53(c). I therefore enter this Final Order without a hearing based on relevant material contained in the investigative file, see id. 1309.53(d), and make the following findings of fact. Findings Respondent is a Michigan corporation which was formed in July 2004 with offices located at 6711 Greenfield Road, Detroit, Michigan. Respondent is coowned by Abed Mehanna, who serves as VerDate Aug<31>2005 21:40 Dec 18, 2007 Jkt 214001 its Vice-President, and his brother, Mohamed Mehanna, who serves as its President. Respondent has a total of three employees which include Abed, Mohamed, and a third brother, Bilal Mehanna. Abed and Mohamed Mehanna are also co-owners with a third brother, Hussein (a.k.a. Jack), of another corporation, Mehanna Brothers Export/Import, Inc. (hereinafter, Mehanna Brothers). According to the investigative file, Mehanna Brothers holds a DEA registration which authorizes it to distribute list I chemicals. However, in April 2005, Mehanna Brothers submitted a request to change the address of its registered location to a new facility at 6711 Greenfield Road in Detroit. Accordingly, in June 2005, DEA investigators went to the premises to inspect the facility. During the inspection, the investigators found that Mehanna Brothers was distributing list I chemicals from the building. During the visit, a DEA Investigator informed Hussein (Jack) Mehanna that Mehanna Brothers could not sell list I chemicals out of the Greenfield Road facility because it was not a registered location. The DI then sought the surrender of Mehanna Brothers’ registration. However, Hussein Mehanna refused to do so. Thereafter, on February 16, 2006, Mohamed Mehanna submitted an application for a registration to distribute ephedrine and pseudoephedrine on behalf of MB Wholesale, Inc (Respondent). The application gave as Respondent’s proposed registered location the same Greenfield Road facility that Mehanna Brothers used. On April 13, 2006, two DEA Investigators went to Respondent’s Greenfield Road facility to conduct a pre-registration investigation. Upon their arrival, the DIs recognized that the facility was the same one from which Mehanna Brothers had distributed list I chemicals without a registration. During a subsequent telephone conversation, Abed Mehanna told a DI that Respondent had essentially the same management team as Mehanna Brothers, but that Hussein (Jack) was no longer involved in the business. Abed Mehanna also told the DI that Respondent had the same customers as Mehanna Brothers and had added some additional customers. The investigative file contains dozens of invoices which were provided by Abed Mehanna to a DEA Investigator. The invoices, which are dated from January 5 through May 20, 2005, document the sale of various list I products (which contained either PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 71957 pseudoephedrine or ephedrine) including Advil Cold & Sinus, Tylenol Cold, Mini Two-Way, Mini-Thins, and Ephedrine. Most significantly, each of the invoices bears the caption ‘‘MB Wholesale,’’ and give as its address, ‘‘6711 Greenfield Rd. Detroit, Mi.’’ The invoices also confirm that Respondent was supplying these products to nontraditional retailers such as gas stations and convenience stores. Discussion Section 303(h) of the Controlled Substances Act (CSA) provides that ‘‘[t]he Attorney General shall register an applicant to distribute a list I chemical unless the Attorney General determines that registration of the applicant is inconsistent with the public interest.’’ 21 U.S.C. 823(h). In making this determination, Congress directed that I consider the following factors: (1) maintenance by the applicant of effective controls against diversion of listed chemicals into other than legitimate channels; (2) compliance by the applicant with applicable Federal, State, and local law; (3) any prior conviction record of the applicant under Federal or State laws relating to controlled substances or to chemicals controlled under Federal or State law; (4) any past experience of the applicant in the manufacture and distribution of chemicals; and (5) such other factors as are relevant to and consistent with the public health and safety. Id. ‘‘These factors are considered in the disjunctive.’’ Joy’s Ideas, 70 FR 33195, 33197 (2005). I may rely on any one or a combination of factors, and may give each factor the weight I deem appropriate in determining whether an application for a registration should be denied. See, e.g., David M. Starr, 71 FR 39367, 39368 (2006); Energy Outlet, 64 FR 14269 (1999). Moreover, I am ‘‘not required to make findings as to all of the factors.’’ Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); Morall v. DEA, 412 F.3d 165, 173–74 (D.C. Cir. 2005). Having considered all of the factors, I conclude that factors two, four, and five establish that granting Respondent’s application would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h). While Respondent is nominally a separate legal entity from Mehanna Brothers, the record establishes that the firms are substantially identical and thus, the illegal conduct of the latter in distributing listed chemicals from an unregistered location is properly considered in evaluating Respondent’s application. Moreover, the record contains substantial evidence which establishes that Respondent also violated federal law by distributing E:\FR\FM\19DEN1.SGM 19DEN1 71958 Federal Register / Vol. 72, No. 243 / Wednesday, December 19, 2007 / Notices mstockstill on PROD1PC66 with NOTICES listed chemicals from an unregistered location. Factors Two and Four—The Applicant’s Compliance With Applicable Law and Its Experience in Distributing Listed Chemicals On a date which is not established in the record, Mehanna Brothers moved its business to a facility located at 6711 Greenfield Road, Detroit, Michigan. In April 2005, Mehanna Brothers submitted an application for a modification of its registration to change its registered location to its Greenfield Road facility. Under DEA regulations, a ‘‘request for modification [is] handled in the same manner as an application for registration.’’ 21 CFR 1309.61. Accordingly, in June 2005, DEA investigators went to Respondent’s new facility to conduct an inspection to determine whether to approve its application. During the inspection, the investigators found that Respondent was already distributing listed chemicals from the Greenfield Road facility. Under the CSA, ‘‘[a] separate registration [is] required at each principal place of business * * * where the applicant * * * distributes * * * list I chemicals.’’ 21 U.S.C. 822(e). Moreover, under DEA regulations, ‘‘[n]o person required to be registered shall engage in any activity for which registration is required until the application for registration is approved and a Certificate of Registration is issued by the Administrator to such person.’’ 21 CFR 1309.31(a). Mehanna Brothers was thus in violation of federal law by distributing listed chemicals from an unregistered location. 21 U.S.C. 843(a)(9). The question remains, however, as to whether Mehanna Brothers’ violations are properly considered in evaluating Respondent’s application. Notwithstanding that Mehanna Brothers and Respondent are organized as separate corporations, I conclude the firms are only ‘‘nominally separate business entities.’’ Cf. Roofers Local 149 Security Trust Fund v. Duane Smelser Roofing Co., 285 F. Supp.2d 936, 940 (E.D. Mich. 2003). Because the firms ‘‘have substantially identical management, business, purpose, operation, equipment, customers, supervision and ownership,’’ Mehanna Brothers’ misconduct is also chargeable to Respondent. Cf. Wilson v. International Bhd. of Teamsters, 83 F.3d 747, 759 (6th Cir. 1996). As the record establishes, Respondent’s co-owners, Abed and Mohammed Mehanna, were also coowners with their brother Jack, of VerDate Aug<31>2005 21:40 Dec 18, 2007 Jkt 214001 Mehanna Brothers. Abed Mehanna, Respondent’s co-owner and VicePresident, serves as a corporate officer of Mehanna Brothers. Indeed, as Abed Mehanna told a DI, Respondent had the same management team (except for Hussein) as Mehanna Brothers. Moreover, Respondent and Mehanna Brothers are engaged in the same business of wholesale distribution of general merchandise, and Respondent services the same customers as Mehanna Brothers. Respondent and Mehanna Brothers also use the same Greenfield Road facility. Finally, when in October 2005, DEA investigators asked Mehanna Brothers to provide its sales invoices, the invoices bore Respondent’s name and address. Accordingly, based on all of the above, I find that Respondent and Mehanna Brothers are only nominally separate entities. Mehanna Brothers’ violations of federal law in distributing listed chemicals from an unregistered location are thus properly considered in determining whether granting Respondent’s application would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h).1 As noted in other cases, distributing listed chemicals out of an unregistered location provides ample reason to deny an application. See Sato Pharmaceutical, Inc., 71 FR 52165, 52166 (2006); Archer’s Trading Co., 72 FR 42114, 421116–17 (2007) (revoking registration in part for distributing listed chemicals out of unregistered location); John J. Fotinopolous 72 FR 24602, 24606 (2007) (same). Respondent’s misconduct does not inspire confidence that it will faithfully comply with applicable laws and diligently protect against the diversion of listed chemical products. I thus conclude that Respondent’s record of non-compliance with federal law and its experience in dispensing listed chemicals supports the conclusion that its registration would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h). Factor Five—Other Factors Relevant To and Consistent With Public Health and Safety The illicit manufacture and abuse of methamphetamine have had pernicious effects on families and communities throughout the nation. Cutting off the supply source of methamphetamine traffickers is of critical importance in protecting the American people from the devastation wreaked by this drug. 1 The invoices also support a finding that Respondent itself distributed list I chemicals without a registration in violation of federal law. See 21 U.S.C. §§ 822(a)(1) & 843(a)(9). PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 While listed chemical products containing pseudoephedrine and ephedrine are currently recognized as having legitimate medical uses,2 DEA orders establish that convenience stores and gas-stations constitute the nontraditional retail market for legitimate consumers of products containing these chemicals. See, e.g., Tri-County Bait Distributors, 71 FR 52160, 52161–62 (2006); D & S Sales, 71 FR 37607, 37609 (2006); Branex, Inc., 69 FR 8682, 8690– 92 (2004). DEA has further found that there is a substantial risk of diversion of list I chemicals into the illicit manufacture of methamphetamine when these products are sold by nontraditional retailers. See, e.g., Joy’s Ideas, 70 FR 33195, 33199 (2005) (finding that the risk of diversion was ‘‘real’’ and ‘‘substantial’’); Jay Enterprises, Inc., 70 FR 24620, 24621 (2005) (noting ‘‘heightened risk of diversion’’ if application to distribute to non-traditional retailers was granted). Accordingly, ‘‘[w]hile there are no specific prohibitions under the Controlled Substances Act regarding the sale of listed chemical products to [gas stations and convenience stores], DEA has nevertheless found that [these entities] constitute sources for the diversion of listed chemical products.’’ Joey Enterprises, Inc., 70 FR 76866, 76867 (2005). See also TNT Distributors, 70 FR 12729, 12730 (2005) (special agent testified that ‘‘80 to 90 percent of ephedrine and pseudoephedrine being used [in Tennessee] to manufacture methamphetamine was being obtained from convenience stores’’).3 Here, the record establishes that Respondent seeks a registration to distribute listed chemical products to non-traditional retailers of these products such as gas stations and convenience stores. Moreover, Respondent proposes to sell several combination ephedrine products such as Mini Two-Way, a product rarely found in traditional markets, but one which is highly ‘‘popular with 2 The FDA is, however, currently proposing to remove combination ephedrine-guaifenesin products from its over-the-counter (OTC) drug monograph and to declare them not safe and effective for OTC use. See 70 FR 40232 (2005). 3 See OTC Distribution Co., 68 FR 70538, 70541 (2003) (noting ‘‘over 20 different seizures of [gray market distributor’s] pseudoephedrine product at clandestine sites,’’ and in that eight-month period distributor’s product ‘‘was seized at clandestine laboratories in eight states, with over 2 million dosage units seized in Oklahoma alone.’’); MDI Pharmaceuticals, 68 FR 4233, 4236 (2003) (finding that ‘‘pseudoephedrine products distributed by [gray market distributor] have been uncovered at numerous clandestine methamphetamine settings throughout the United States and/or discovered in the possession of individuals apparently involved in the illicit manufacture of methamphetamine’’). E:\FR\FM\19DEN1.SGM 19DEN1 Federal Register / Vol. 72, No. 243 / Wednesday, December 19, 2007 / Notices methamphetamine traffickers,’’ and which has ‘‘been disproportionately represented in clandestine lab seizures around the United States.’’ T. Young Associates, Inc., 71 FR 60567, 60568 (2006) (int. quotations and citation omitted). See also H & R Corp., 71 FR 30168, 30169 (2006); Joy’s Ideas, 70 FR at 33197. Moreover, a substantial number of the invoices suggest that Respondent’s customers purchased quantities of these products that far exceeded legitimate demand. This factor thus further supports the conclusion that Respondent’s registration would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h). Order Accordingly, pursuant to the authority vested in me by 21 U.S.C. 823(h), as well as 28 CFR 0.100(b) and 0.104, I order that the application of MB Wholesale, Inc., for a DEA Certificate of Registration to distribute list I chemicals, be, and it hereby is, denied. This order is effective January 18, 2008. Dated: December 7, 2007. Michele M. Leonhart, Deputy Administrator. [FR Doc. E7–24610 Filed 12–18–07; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Drug Enforcement Administration mstockstill on PROD1PC66 with NOTICES Patrick K. Riggs, M.D.; Denial of Application On June 19, 2007, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, issued an Order to Show Cause to Patrick K. Riggs (Respondent), of Fort Worth, Texas. The Show Cause Order proposed the denial of Respondent’s pending application for a DEA Certificate of Registration as a practitioner, on the ground that his registration would be ‘‘inconsistent with the public interest.’’ Show Cause Order at 1 (citing 21 U.S.C. 823(f) & 824(a)(4)). The Show Cause Order specifically alleged that ‘‘from May 2005 through August 2006 [Respondent], ordered 22,500 dosage units of hydrocodone from Henry Schein, Inc.,’’ and that notwithstanding his ‘‘assertions to Henry Schein, Inc., that [he was] practicing medicine during that period [Respondent], subsequently admitted to DEA Diversion Investigators that [he] had not practiced medicine since 1997 and had no current patients.’’ Id. The Show Cause Order alleged that on August 31, 2006, Respondent had met with DEA Diversion Investigators at his VerDate Aug<31>2005 21:40 Dec 18, 2007 Jkt 214001 home and admitted to them that he had consumed all of the hydrocodone drugs that he had obtained from Henry Schein, Inc. Id. The Show Cause Order further alleged that Respondent did not maintain the purchasing and dispensing records required under federal law for the controlled substances he had obtained from Henry Schein, Inc. Id. Finally, the Show Cause Order alleged that during the aforementioned meeting with DEA investigators, Respondent had upon the advice of counsel, voluntarily surrendered his DEA Registration and agreed not to apply for a new registration for a two-year period. Id. at 2. On June 25, 2007, the Show Cause Order, which also notified Respondent of his right to request a hearing on the allegations, was served on him by a Federal Express delivery to his residence, which is also the address of his proposed registered location. Because: (1) More than thirty days have passed since service of the Show Cause Order, and (2) neither Respondent, nor anyone purporting to represent him, has requested a hearing, I conclude that Respondent has waived his right to a hearing. See 21 CFR 1301.43(d). I therefore enter this Final Order without a hearing based on relevant material contained in the investigative file, see id. 1301.43(e), and make the following findings. Findings Respondent previously held a DEA Registration as a practitioner, which authorized him to dispense controlled substances in schedules II through V. On various dates between May 2005 and August 2006, DEA received several reports from Henry Schein, Inc., regarding Respondent’s excessive purchases of controlled substances. These reports showed that during the above period, Respondent purchased 22,500 dosage units of combination hydrocodone/acetaminophen (all in 10/ 325 mg. strength), 1400 dosage units of clonazepam (in both 1 mg. and 2 mg. strength), 1200 dosage units of aspirin with codeine (60 mg.), 500 dosage units of acetaminophen with codeine (60 mg.), and hydrocodone with ibuprofen (7.5/200 mg.).1 Sometime around September 2005, a Schein employee apparently questioned Respondent regarding his purchases. Accordingly, on September 24, 2005, Respondent faxed a letter which stated that he had served as ‘‘a consultant to 1 The reports also showed that Respondent had purchased two anabolic steroids, nandrolone and testosterone cypionate. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 71959 the TXSBME’’ 2 from 1995 through 1998 ‘‘in the area of disciplinary action,’’ and had ‘‘earned * * * a great many enemies (because of my testimony in med[ical] malpractice cases for the state.’’ Respondent further wrote that he was engaged in the practice of ‘‘general medicine,’’ and that his ‘‘patient base is select. The concentration is chronic pain secondary to terminal illness[,] i.e., cancer.’’ On August 31, 2006, DEA investigators went to Respondent’s residence (and registered location) and met with Respondent and his attorney regarding his excessive purchases. During the interview, Respondent was asked what medications he took. Respondent went to another room and retrieved approximately twenty-five containers of non-controlled prescription drugs. Upon further questioning, Respondent admitted that he had been on methadone and pulled an empty container of methadone from his pocket. During the interview, Respondent also admitted that he had not practiced medicine since 1997 and did not have any patients. One of the investigators then presented to Respondent’s attorney a spreadsheet listing his controlled substance purchases from Schein. After Respondent and his lawyer were allowed to privately discuss the matter, Respondent admitted that he had used all of the controlled substances which he had purchased from Schein. Respondent also stated that to prevent damaging his liver, he had ground up the hydrocodone tablets to separate out the acetaminophen. Respondent also admitted that he had failed to maintain purchasing and dispensing records as required by Federal law. Based on this information, the investigators advised Respondent’s counsel that they would seek an Order to Show Cause to revoke his registration unless he voluntarily surrendered it. After consulting with his attorney, Respondent voluntarily surrendered his registration and signed the applicable form.3 Two months later, on October 30, 2006, Respondent submitted an application for a new registration. On the form, Respondent acknowledged that he had surrendered his registration and explained that ‘‘[t]he surrender[] could be classified as a misunderstanding secondary to misinformation. I view it[] as an unusual set of unnecessary and 2 Presumably, the Texas State Board of Medical Examiners. 3 On the form, Respondent also ‘‘agree[d] not to re apply for a period of two years.’’ E:\FR\FM\19DEN1.SGM 19DEN1

Agencies

[Federal Register Volume 72, Number 243 (Wednesday, December 19, 2007)]
[Notices]
[Pages 71956-71959]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-24610]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


MB Wholesale, Inc.; Denial of Application

    On August 7, 2006, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to MB Wholesale, Inc. (Respondent), of Detroit, Michigan. 
The Show Cause Order proposed the denial of Respondent's pending 
application to distribute the list I chemicals ephedrine and 
pseudoephedrine, on the ground that ``its registration would be 
inconsistent with the public interest.'' Show Cause Order at 1 (citing 
21 U.S.C. 823(h)).
    The Show Cause Order specifically alleged that ``on or about 
February 16, 2006, [Respondent], by Mohamed Mehanna, submitted an 
application for registration as a distributor of the list I chemicals 
ephedrine and pseudoephedrine,'' and that the fees for incorporating 
Respondent ``were paid by a check drawn'' on the account of Mehanna 
Brothers Export Import, Inc. (Mehanna Brothers). Id. at 2. The Show 
Cause Order alleged that Mehanna Brothers was managed by Abed, Mohammed 
and Jack Mehanna, and that it held a DEA registration to distribute 
list I chemicals at the registered location of 14442 Michigan Avenue, 
Dearborn, Michigan.'' Id.
    The Show Cause Order alleged that in January 2005, Mehanna Brothers 
had moved its business to 6711 Greenfield Road, Detroit, Michigan, and 
distributed list I chemicals from this location without a registration 
authorizing it to do so. Id. The Show Cause Order further alleged that 
on July 10, 2006, DEA issued an Order to Show Cause proposing the 
revocation of Mehanna Brothers' registration based on this activity. 
Id.
    The Show Cause Order next alleged that on April 16, 2006, DEA 
investigators went to Respondent's proposed registered location to 
conduct a pre-registration inspection and discovered that the facility 
was the same one that was used by Mehanna Brothers. Id. The Show Cause 
Order further alleged that on May 18, 2006, Abed Mehanna told DEA 
investigators that he was a co-owner of Respondent, that

[[Page 71957]]

Respondent was operated by himself as well as his brothers Mohammed and 
Bilal, and that it ``had the same convenience store customers as 
Mehanna Brothers.'' Id. at 3.
    The Show Cause Order also alleged that a ``review of [the] invoices 
provided by Mehanna Brothers indicated that the bulk of the product 
sold in dollar terms consisted of various forms of ephedrine 
products,'' and that ``[m]any of these records did not properly 
identify the strength, packaging, and quantity of the listed 
chemical.'' Id. The Show Cause Order thus alleged that ``Mehanna 
Brothers and its management did not properly carry out the 
recordkeeping responsibilities of a registrant.'' Id.
    Finally, the Show Cause Order alleged that the ``bulk of precursor 
products destined for illegal methamphetamine laboratories are diverted 
through non-traditional markets such as convenience stores, gas 
stations, and other small retail outlets.'' Id. The Show Cause Order 
thus alleged that ``[t]he ownership and management of MB intend to 
parallel Mehanna Brothers'' practice of supplying inordinate amounts of 
listed chemical products to outlets which have no expectation of 
legitimate sales in the amounts that they are receiving, leading to the 
diversion of such products.'' Id.
    On August 14, 2006, the Show Cause Order was served on Respondent 
by certified mail as evidenced by the signed return-receipt card. 
Thereafter, on September 7, 2006, Respondent requested a hearing. The 
matter was assigned to Administrative Law Judge (ALJ) Mary Ellen 
Bittner, who ordered Respondent to file its pre-hearing statement no 
later than November 13, 2006. Order Terminating Proceedings at 1.
    Respondent did not, however, comply with the ALJ's order. 
Accordingly, on November 27, 2006, the ALJ found that Respondent had 
waived its right to a hearing and ordered that the proceeding be 
terminated. On June 11, 2007, the case file was forwarded to this 
office for final agency action.
    Having considered the entire record in this matter, I adopt the 
ALJ's finding that Respondent has waived its right to a hearing. See 21 
CFR 1309.53(c). I therefore enter this Final Order without a hearing 
based on relevant material contained in the investigative file, see id. 
1309.53(d), and make the following findings of fact.

Findings

    Respondent is a Michigan corporation which was formed in July 2004 
with offices located at 6711 Greenfield Road, Detroit, Michigan. 
Respondent is co-owned by Abed Mehanna, who serves as its Vice-
President, and his brother, Mohamed Mehanna, who serves as its 
President. Respondent has a total of three employees which include 
Abed, Mohamed, and a third brother, Bilal Mehanna. Abed and Mohamed 
Mehanna are also co-owners with a third brother, Hussein (a.k.a. Jack), 
of another corporation, Mehanna Brothers Export/Import, Inc. 
(hereinafter, Mehanna Brothers).
    According to the investigative file, Mehanna Brothers holds a DEA 
registration which authorizes it to distribute list I chemicals. 
However, in April 2005, Mehanna Brothers submitted a request to change 
the address of its registered location to a new facility at 6711 
Greenfield Road in Detroit. Accordingly, in June 2005, DEA 
investigators went to the premises to inspect the facility. During the 
inspection, the investigators found that Mehanna Brothers was 
distributing list I chemicals from the building.
    During the visit, a DEA Investigator informed Hussein (Jack) 
Mehanna that Mehanna Brothers could not sell list I chemicals out of 
the Greenfield Road facility because it was not a registered location. 
The DI then sought the surrender of Mehanna Brothers' registration. 
However, Hussein Mehanna refused to do so.
    Thereafter, on February 16, 2006, Mohamed Mehanna submitted an 
application for a registration to distribute ephedrine and 
pseudoephedrine on behalf of MB Wholesale, Inc (Respondent). The 
application gave as Respondent's proposed registered location the same 
Greenfield Road facility that Mehanna Brothers used.
    On April 13, 2006, two DEA Investigators went to Respondent's 
Greenfield Road facility to conduct a pre-registration investigation. 
Upon their arrival, the DIs recognized that the facility was the same 
one from which Mehanna Brothers had distributed list I chemicals 
without a registration.
    During a subsequent telephone conversation, Abed Mehanna told a DI 
that Respondent had essentially the same management team as Mehanna 
Brothers, but that Hussein (Jack) was no longer involved in the 
business. Abed Mehanna also told the DI that Respondent had the same 
customers as Mehanna Brothers and had added some additional customers.
    The investigative file contains dozens of invoices which were 
provided by Abed Mehanna to a DEA Investigator. The invoices, which are 
dated from January 5 through May 20, 2005, document the sale of various 
list I products (which contained either pseudoephedrine or ephedrine) 
including Advil Cold & Sinus, Tylenol Cold, Mini Two-Way, Mini-Thins, 
and Ephedrine. Most significantly, each of the invoices bears the 
caption ``MB Wholesale,'' and give as its address, ``6711 Greenfield 
Rd. Detroit, Mi.'' The invoices also confirm that Respondent was 
supplying these products to non-traditional retailers such as gas 
stations and convenience stores.

Discussion

    Section 303(h) of the Controlled Substances Act (CSA) provides that 
``[t]he Attorney General shall register an applicant to distribute a 
list I chemical unless the Attorney General determines that 
registration of the applicant is inconsistent with the public 
interest.'' 21 U.S.C. 823(h). In making this determination, Congress 
directed that I consider the following factors:

    (1) maintenance by the applicant of effective controls against 
diversion of listed chemicals into other than legitimate channels;
    (2) compliance by the applicant with applicable Federal, State, 
and local law;
    (3) any prior conviction record of the applicant under Federal 
or State laws relating to controlled substances or to chemicals 
controlled under Federal or State law;
    (4) any past experience of the applicant in the manufacture and 
distribution of chemicals; and
    (5) such other factors as are relevant to and consistent with 
the public health and safety.
    Id.

    ``These factors are considered in the disjunctive.'' Joy's Ideas, 
70 FR 33195, 33197 (2005). I may rely on any one or a combination of 
factors, and may give each factor the weight I deem appropriate in 
determining whether an application for a registration should be denied. 
See, e.g., David M. Starr, 71 FR 39367, 39368 (2006); Energy Outlet, 64 
FR 14269 (1999). Moreover, I am ``not required to make findings as to 
all of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); 
Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
    Having considered all of the factors, I conclude that factors two, 
four, and five establish that granting Respondent's application would 
be ``inconsistent with the public interest.'' 21 U.S.C. 823(h). While 
Respondent is nominally a separate legal entity from Mehanna Brothers, 
the record establishes that the firms are substantially identical and 
thus, the illegal conduct of the latter in distributing listed 
chemicals from an unregistered location is properly considered in 
evaluating Respondent's application. Moreover, the record contains 
substantial evidence which establishes that Respondent also violated 
federal law by distributing

[[Page 71958]]

listed chemicals from an unregistered location.

Factors Two and Four--The Applicant's Compliance With Applicable Law 
and Its Experience in Distributing Listed Chemicals

    On a date which is not established in the record, Mehanna Brothers 
moved its business to a facility located at 6711 Greenfield Road, 
Detroit, Michigan. In April 2005, Mehanna Brothers submitted an 
application for a modification of its registration to change its 
registered location to its Greenfield Road facility.
    Under DEA regulations, a ``request for modification [is] handled in 
the same manner as an application for registration.'' 21 CFR 1309.61. 
Accordingly, in June 2005, DEA investigators went to Respondent's new 
facility to conduct an inspection to determine whether to approve its 
application. During the inspection, the investigators found that 
Respondent was already distributing listed chemicals from the 
Greenfield Road facility.
    Under the CSA, ``[a] separate registration [is] required at each 
principal place of business * * * where the applicant * * * distributes 
* * * list I chemicals.'' 21 U.S.C. 822(e). Moreover, under DEA 
regulations, ``[n]o person required to be registered shall engage in 
any activity for which registration is required until the application 
for registration is approved and a Certificate of Registration is 
issued by the Administrator to such person.'' 21 CFR 1309.31(a). 
Mehanna Brothers was thus in violation of federal law by distributing 
listed chemicals from an unregistered location. 21 U.S.C. 843(a)(9).
    The question remains, however, as to whether Mehanna Brothers' 
violations are properly considered in evaluating Respondent's 
application. Notwithstanding that Mehanna Brothers and Respondent are 
organized as separate corporations, I conclude the firms are only 
``nominally separate business entities.'' Cf. Roofers Local 149 
Security Trust Fund v. Duane Smelser Roofing Co., 285 F. Supp.2d 936, 
940 (E.D. Mich. 2003). Because the firms ``have substantially identical 
management, business, purpose, operation, equipment, customers, 
supervision and ownership,'' Mehanna Brothers' misconduct is also 
chargeable to Respondent. Cf. Wilson v. International Bhd. of 
Teamsters, 83 F.3d 747, 759 (6th Cir. 1996).
    As the record establishes, Respondent's co-owners, Abed and 
Mohammed Mehanna, were also co-owners with their brother Jack, of 
Mehanna Brothers. Abed Mehanna, Respondent's co-owner and Vice-
President, serves as a corporate officer of Mehanna Brothers. Indeed, 
as Abed Mehanna told a DI, Respondent had the same management team 
(except for Hussein) as Mehanna Brothers.
    Moreover, Respondent and Mehanna Brothers are engaged in the same 
business of wholesale distribution of general merchandise, and 
Respondent services the same customers as Mehanna Brothers. Respondent 
and Mehanna Brothers also use the same Greenfield Road facility. 
Finally, when in October 2005, DEA investigators asked Mehanna Brothers 
to provide its sales invoices, the invoices bore Respondent's name and 
address.
    Accordingly, based on all of the above, I find that Respondent and 
Mehanna Brothers are only nominally separate entities. Mehanna 
Brothers' violations of federal law in distributing listed chemicals 
from an unregistered location are thus properly considered in 
determining whether granting Respondent's application would be 
``inconsistent with the public interest.'' 21 U.S.C. 823(h).\1\
---------------------------------------------------------------------------

    \1\ The invoices also support a finding that Respondent itself 
distributed list I chemicals without a registration in violation of 
federal law. See 21 U.S.C. Sec. Sec.  822(a)(1) & 843(a)(9).
---------------------------------------------------------------------------

    As noted in other cases, distributing listed chemicals out of an 
unregistered location provides ample reason to deny an application. See 
Sato Pharmaceutical, Inc., 71 FR 52165, 52166 (2006); Archer's Trading 
Co., 72 FR 42114, 421116-17 (2007) (revoking registration in part for 
distributing listed chemicals out of unregistered location); John J. 
Fotinopolous 72 FR 24602, 24606 (2007) (same). Respondent's misconduct 
does not inspire confidence that it will faithfully comply with 
applicable laws and diligently protect against the diversion of listed 
chemical products. I thus conclude that Respondent's record of non-
compliance with federal law and its experience in dispensing listed 
chemicals supports the conclusion that its registration would be 
``inconsistent with the public interest.'' 21 U.S.C. 823(h).

Factor Five--Other Factors Relevant To and Consistent With Public 
Health and Safety

    The illicit manufacture and abuse of methamphetamine have had 
pernicious effects on families and communities throughout the nation. 
Cutting off the supply source of methamphetamine traffickers is of 
critical importance in protecting the American people from the 
devastation wreaked by this drug.
    While listed chemical products containing pseudoephedrine and 
ephedrine are currently recognized as having legitimate medical 
uses,\2\ DEA orders establish that convenience stores and gas-stations 
constitute the non-traditional retail market for legitimate consumers 
of products containing these chemicals. See, e.g., Tri-County Bait 
Distributors, 71 FR 52160, 52161-62 (2006); D & S Sales, 71 FR 37607, 
37609 (2006); Branex, Inc., 69 FR 8682, 8690-92 (2004). DEA has further 
found that there is a substantial risk of diversion of list I chemicals 
into the illicit manufacture of methamphetamine when these products are 
sold by non-traditional retailers. See, e.g., Joy's Ideas, 70 FR 33195, 
33199 (2005) (finding that the risk of diversion was ``real'' and 
``substantial''); Jay Enterprises, Inc., 70 FR 24620, 24621 (2005) 
(noting ``heightened risk of diversion'' if application to distribute 
to non-traditional retailers was granted).
---------------------------------------------------------------------------

    \2\ The FDA is, however, currently proposing to remove 
combination ephedrine-guaifenesin products from its over-the-counter 
(OTC) drug monograph and to declare them not safe and effective for 
OTC use. See 70 FR 40232 (2005).
---------------------------------------------------------------------------

    Accordingly, ``[w]hile there are no specific prohibitions under the 
Controlled Substances Act regarding the sale of listed chemical 
products to [gas stations and convenience stores], DEA has nevertheless 
found that [these entities] constitute sources for the diversion of 
listed chemical products.'' Joey Enterprises, Inc., 70 FR 76866, 76867 
(2005). See also TNT Distributors, 70 FR 12729, 12730 (2005) (special 
agent testified that ``80 to 90 percent of ephedrine and 
pseudoephedrine being used [in Tennessee] to manufacture 
methamphetamine was being obtained from convenience stores'').\3\
---------------------------------------------------------------------------

    \3\ See OTC Distribution Co., 68 FR 70538, 70541 (2003) (noting 
``over 20 different seizures of [gray market distributor's] 
pseudoephedrine product at clandestine sites,'' and in that eight-
month period distributor's product ``was seized at clandestine 
laboratories in eight states, with over 2 million dosage units 
seized in Oklahoma alone.''); MDI Pharmaceuticals, 68 FR 4233, 4236 
(2003) (finding that ``pseudoephedrine products distributed by [gray 
market distributor] have been uncovered at numerous clandestine 
methamphetamine settings throughout the United States and/or 
discovered in the possession of individuals apparently involved in 
the illicit manufacture of methamphetamine'').
---------------------------------------------------------------------------

    Here, the record establishes that Respondent seeks a registration 
to distribute listed chemical products to non-traditional retailers of 
these products such as gas stations and convenience stores. Moreover, 
Respondent proposes to sell several combination ephedrine products such 
as Mini Two-Way, a product rarely found in traditional markets, but one 
which is highly ``popular with

[[Page 71959]]

methamphetamine traffickers,'' and which has ``been disproportionately 
represented in clandestine lab seizures around the United States.'' T. 
Young Associates, Inc., 71 FR 60567, 60568 (2006) (int. quotations and 
citation omitted). See also H & R Corp., 71 FR 30168, 30169 (2006); 
Joy's Ideas, 70 FR at 33197. Moreover, a substantial number of the 
invoices suggest that Respondent's customers purchased quantities of 
these products that far exceeded legitimate demand. This factor thus 
further supports the conclusion that Respondent's registration would be 
``inconsistent with the public interest.'' 21 U.S.C. 823(h).

Order

    Accordingly, pursuant to the authority vested in me by 21 U.S.C. 
823(h), as well as 28 CFR 0.100(b) and 0.104, I order that the 
application of MB Wholesale, Inc., for a DEA Certificate of 
Registration to distribute list I chemicals, be, and it hereby is, 
denied. This order is effective January 18, 2008.

    Dated: December 7, 2007.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E7-24610 Filed 12-18-07; 8:45 am]
BILLING CODE 4410-09-P