[Federal Register Volume 64, Number 211 (Tuesday, November 2, 1999)]
[Notices]
[Pages 59215-59219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28603]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 98-37]
NVE Pharmaceuticals, Inc.; Denial of Applications
On July 14, 1998, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA) issued an
Order to Show Cause to NVE Pharmaceuticals, Inc. (Respondent),
notifying it of an opportunity to show cause as to why DEA should not
deny its May 7, 1997 applications for registration as an exporter of
List I chemicals pursuant to 21 U.S.C. 958(c) and as a manufacturer for
distribution of List I chemicals pursuant to 21 U.S.C. 823(h), for
reason that such registration would be inconsistent with the public
interest.
Respondent timely filed a request for a hearing on the issues
raised by the Order to Show Cause. The hearing was held in Newark, New
Jersey on December 3, 1998, before Administrative Law Judge Gail A.
Randall. At the hearing, the Government called witnesses to testify and
introduced documentary evidence. Respondent introduced documentary
evidence, however it did not call any witnesses to testify. After the
hearing, both parties submitted proposed findings of fact, conclusions
of law and argument. On June 17, 1999, Judge Randall issued her
Recommended Rulings, Findings of Fact, Conclusions of Law, and
Decision, recommending that Respondent's applications for registration
be denied. Neither party filed exceptions to Judge Randall's
Recommended Rulings, Findings of Fact, Conclusions of Law and Decision,
and on July 21, 1999, Judge Randall transmitted the record of these
proceedings to the Deputy Administrator.
The Deputy Administrator has considered the record in its entirety,
and pursuant to 21 CFR 1316.67, hereby issues his final order based
upon findings of fact and conclusions of law as hereinafter set forth.
The Deputy Administrator adopts, except as specifically noted, the
Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision
of the Administrative Law Judge. His adoption is in no manner
diminished by any recitation of facts, issues and conclusions herein,
or of any failure to mention a matter of fact or law.
The Deputy Administrator finds that Respondent was incorporated in
1986 with Robert Occhifinto as its president. Respondent is a
manufacturer and distributor of over-the-counter pharmaceutical
products and nutritional vitamins, including diet and exercise
supplements. Some of the products that Respondent manufactures and
sells contain, in whole or in part, the listed chemicals ephedrine,
pseudoephedrine, and phenylpropanolamine (PPA). Respondent employs over
70 individuals, many of whom are extremely handicapped. As early as
1997, Respondent established a position for a ``Regulatory Affairs''
representative who is responsible for ensuring that Respondent complies
with regulatory requirements.
Mr. Occhifinto is involved in numerous community and religious
activities. He donates his time and personal resources to a variety of
causes, and is also responsible for transforming a toxic waste site
into a productive business complex.
The Deputy Administrator finds that ephedrine, pseudoephedrine and
PPA are all List I chemicals that have legitimate uses, but they can
also be used in the illicit manufacture of controlled substances.
Ephedrine and pseudoephedrine can be used to manufacture
methamphetamine, a Schedule II controlled substance that is a very
potent central nervous system stimulant. Abuse of methamphetamine is a
growing problem in the United States. The chemicals needed to
manufacture methamphetamine are readily accessible at almost any
pharmacy or retail store that sells pharmaceutical products. Ephedrine
and pseudoephedrine extracted from over-the-counter products is often
used in the illicit manufacture of methamphetamine.
In an effort to curb the use of licit chemicals in the illicit
manufacture of controlled substances, Congress amended the Controlled
Substances Act in 1988 with the passage of the Chemical Diversion and
Trafficking Act (CDTA). Pub. L. 100-690, 102 Stat. 4181 (1988). The
CDTA required that records and reports be made of certain transactions
involving various chemicals. However, products containing ephedrine and
pseudoephedrine were exempt from the recordkeeping and reporting
requirements because they were approved for marketing under the Federal
Food, Drug, and Cosmetic Act. The CDTA also made it illegal to
distribute a listed chemical ``knowing, or having reasonable cause to
believe, that the listed chemical will be used to manufacture a
controlled substance * * *.'' See 21 U.S.C. 841(d)(2).
In November 1990, the DEA office in San Francisco discovered four
25
[[Page 59216]]
kilogram drums of ephedrine hydrochloride with Respondent's labels on
them during the course of an investigation of a large scale
methamphetamine manufacturing organization. As a result, the DEA office
in Newark began an investigation of Respondent. A review of United
Parcel Service (UPS) records, revealed that Respondent had been
shipping ephedrine to an individual who lived in West Virginia, and
later in California.
During the course of its investigation, DEA discovered that a New
York chemical supplier shipped ephedrine hydrochloride to Respondent on
July 12, 1990. A review of Respondent's shipping invoices indicated
that Respondent claims to have shipped 4,000 bottles of 25 milligram
ephedrine tablets to the individual in West Virginia on July 13, 1990.
A UPS invoice dated July 13, 1990, indicated that four 70 pound
packages were shipped from Respondent to the individual in West
Virginia.
A DEA investigator compared the incoming bulk shipment from the New
York chemical company to Respondent with the outgoing shipment from
Respondent to the individual in West Virginia, and concluded that for
the amount of bulk ephedrine purchased by Respondent, an insufficient
number of ephedrine tablets was being manufactured. Additionally, the
recorded weight of the UPS shipment did not correspond with the same
shipment as indicated by Respondent's shipping invoice. Each 25
milligram ephedrine tablet actually weighed 85 milligrams due to the
binders and fillers holding the tablet together. Therefore, if 4,000
bottles of 25 milligram tablets were shipped to the individual, as
indicated on Respondent's shipping invoice, then the weight of the
shipment would have been more than 2.5 times the weight of what was
actually shipped according to the UPS record.
Later in 1990, a New Jersey chemical company contacted DEA
regarding a suspicious order for ephedrine hydrochloride that it had
received from Respondent. DEA controlled and monitored the shipment
from the New Jersey chemical company to Respondent, then from
Respondent to UPS, and finally to California where it was delivered to
the individual's residence. About a week later, in early January 1991,
UPS advised DEA of an additional shipment from Respondent to an address
in California. Once again, DEA controlled and monitored the shipment
from Respondent to the individual's residence in California.
Respondent and Mr. Occhifinto ultimately admitted that from March
22, 1990 through January 2, 1991, 22 shipments totaling 2,700 kilograms
of bulk ephedrine hydrochloride powder were shipped from Respondent to
the individual. DEA confirmed that the product shipped to the
individual was bulk hydrochloride powder, and not ephedrine tablets as
indicated by Respondent's invoices. At the time of these shipments,
records would have been required for the shipment of bulk ephedrine
hydrochloride, however, no records were required for the shipment of
ephedrine tablets.
During the course of this investigation, DEA learned that in late
1900 Mr. Occhifinto had been arrested in Florida. In August 1991, Mr.
Occhifinto was convicted in the United States District Court for the
Middle District of Florida of conspiracy to import hashish, conspiracy
to possess hashish, importation of hashish and possession of hashish
with intent to distribute. The pre-sentencing report introduced into
evidence indicates that the hashish that customs officials confiscated
from Mr. Occhifinto was given to him, without his knowledge, by a
traveling companion, Roland Bossi. Both Mr. Occhifinto and Mr. Bossi
confirmed that ``(Mr.) Occhifinto had no knowledge prior to (his
arrival at customs) about the contraband that he was carrying.'' The
sentencing judge granted Mr. Occhifinto a downward departure from the
sentencing guidelines, ``predicated on the (Respondent's) extremely
limited involvement in the offense.'' Mr. Occhifinto was fined $200.00
and received probation.
Following DEA's investigation of Respondent, Mr. Occhifinto
cooperated extensively with law enforcement personnel. He provided
truthful information regarding Respondent's transactions with the
individual in California, and never hid any aspects of his dealings
with the individual. He also participated in the criminal prosecution
of the individual
On December 17, 1991, Mr. Occhifinto entered into a plea agreement
with the United States Attorney's Office, District of New Jersey. He
pled guilty to one count of money laundering under 21 U.S.C. 1956,
stemming from the transactions between Respondent and the individual,
and accepted full responsibility for his actions. In the stipulations
attached to the plea agreement, Mr. Occhifinto admitted that he ``knew
that the funds were the proceeds of unlawful activity involving the
manufacture and distribution of controlled substances.''
Mr. Occhifinto continued to cooperate with law enforcement
personnel and in September 1995, he entered into a voluntary
diversionary agreement with DEA, where he agreed, among other things,
to limit his sales of pseudoephedrine and to provide DEA with
information regarding Respondent's sales of pseudoephedrine.
On June 4, 1996, as a result of his guilty plea, the United States
District Court, District of New Jersey, sentenced Mr. Occhifinto to 18
months incarceration, and ordered him to pay a fine of $50,000.00. Mr.
Occhifinto was released from prison on December 30, 1997, and he was
placed on three years of supervised release.
In 1993, recognizing, among other things that the use of over-the-
counter ephedrine products in the illegal manufacture of
methamphetamine was increasing, Congress passed the Domestic Chemical
Diversion Control Act (DCDCA). Pub. L. 103-200, 107 Stat. 2333 (1993).
The DCDCA removed the exemption from recordkeeping and reporting
requirements for single entity ephedrine products. In addition, the
DCDCA established a registration system for certain handlers of List I
chemicals.
On May 7, 1997, Respondent submitted applications for DEA
Certificates of Registration to manufacture and to export ephedrine. By
Letter to DEA dated September 9, 1997, Respondent requested a
modification of both its May 7, 1997 applications, to include the
listed chemicals pseudoephedrine and PPA. Since Mr. Occhifinto was
incarcerated at the time that the applications were submitted, another
individual, by power of attorney, signed the applications and the
September 7, 1997 letter, on behalf of Respondent.
The individual who submitted the applications answered ``Yes'' to
the question on the applications which asked:
Has the applicant ever been convicted of a crime in connection
with controlled substances/listed chemicals under State or Federal
law, or ever surrendered or had a Federal registration revoked,
suspended, restricted or denied, or ever had a State professional
license or registration revoked, suspended, denied, restricted or
placed on probation?
In addition, he answered ``Yes'' to the question which asked:
If the applicant is a corporation * * * has any officer,
partner, stockholder, or proprietor been convicted of a crime in
connection with controlled substances/listed chemicals under State
or Federal law, or ever surrendered or had a Federal controlled
substance or listed chemical registration revoked, suspended,
restricted or denied, or ever had a State professional license or
[[Page 59217]]
controlled substance or chemical registration revoked, suspended,
denied, restricted or placed on probation?
These questions are hereinafter referred to as the liability questions.
The applications further stated that if a ``Yes'' answer is provided
for either of the liability questions, the applicant should ``include a
statement using the space provided on the [reverse side of the
application.]'' In addition, the applications stated that for a ``Yes''
answer, the applicant is ``required to submit a statement explaining
such response(s).'' However, the applications did not specifically
inform the applicant to state the nature of the convictions or to state
what type of conviction it was or when it occurred. The following
statement was on the reverse of both applications submitted on behalf
of Respondent:
1990-1991 I sold ephedrine hydrochloride without filing out the
appropriate paperwork.
For the past 7 years NVE has manufactured ephedrine-based
products without incident and has cooperated extensively with the
DEA on numerous occasions.
The DEA investigator who testified at the hearing does not believe that
these responses were adequate, since they do not indicate that the
president of Respondent was convicted of a crime in connection with
controlled substances or listed chemicals.
DEA conducted its pre-registration investigation of Respondent in
August or September of 1997. DEA recommended that Respondent install an
alarm system in the area in which listed chemicals were going to be
stored. According to the DEA investigator, Respondent installed ``(a)
pretty elaborate alarm system.'' Later in the fall of 1997, DEA tested
the alarm system and concluded that the physical security at Respondent
was adequate.
Since Respondent applied for registration prior to a specific date,
it was authorized to continue to manufacture and export List I
chemicals until its applications for registration were acted upon by
DEA. However, it was only authorized to conduct transactions involving
listed chemicals with other registered entities or entities that had
timely filed applications for registration. Respondent recognized this
limitation on its ability to conduct transactions involving ephedrine
hydrochloride, pseudoephedrine and PPA. In a letter to its customers
dated September 25, 1997, Respondent's Senior Vice President Ron Bossi
stated that ``it is mandatory (that Respondent) have a copy of (the
customer's) registration application * * * (and Respondent) must
receive a copy of (the customer's) approved application as well.''
Respondent regularly sent DEA monthly sales reports for ephedrine,
pseudoephedrine and PPA products. A review of these reports revealed
that from January 6, 1998 to October 28, 1998, Respondent entered into
at least 36 separate transactions involving pseudoephedrine with Select
Health, a business located in Oklahoma. Respondent never tried to hide
the existence of these sales to Select Health. Since the quantities
sold by Respondent to Select Health appeared to be excessive, DEA
conducted further investigation. It was determined that Select Health
was not registered with DEA to handle listed chemicals, nor did it have
an application for registration pending. It was further determined that
because almost all of Select Health's business is conducted by mail
order, Select Health needed to be registered with DEA.
Although Respondent did disclose its sales to Select Health to DEA,
DEA did not inform Respondent that Select Health was not registered.
When Respondent independently became aware that Select Health was not
registered, Respondent contacted DEA.
After being notified that Select Health had received approximately
3.5 million dosage units of listed chemicals from Respondent, a DEA
investigator went to Select Health and met with its owner. The owner
informed the investigator that Select Health did not have a DEA
registration, nor was she aware that it needed to be registered with
DEA. The owner further stated that Respondent never informed her that
Select Health needed to be registered with DEA.
In September 1998, DEA seized bottles of 480 tablets of one of
Respondent's pseudephedrine products from clandestine laboratories.
Pursuant to 21 U.S.C. 823(h) and 958(c), the Deputy Administrator
may deny an application for a DEA Certificate of Registration, if he
determines that granting the registration would be inconsistent with
the public interest. Section 823(h) requires that the following factors
be considered in determining the public interest.
(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.
These factors are to be considered in the disjunctive; the Deputy
Administrator may properly rely on any one or a combination of factors,
and may give each factor the weight he deems appropriate in determining
whether any application for registration should be denied See, e.g.
Energy Outlet,! 64 FR 14269 (1999), see also Henry J. Schwarz, Jr.,
M.D., 54 FR 16422 (1989).
As a preliminary matter, DEA has consistently held that a retail
store operates under the control of its owners, stockholders, or other
employees. therefore, the conduct of these individuals is relevant in
evaluating the fitness of an applicant or registrant for registration.
See, e.g., Energy Outlet, 64 FR 14 14269 (1999); Rick's Pharmacy, 62 FR
42595 (1997); Big T Pharmacy, Inc., 47 FR 51830 (1982). Since, Robert
Occhifinto is the president of Respondent, his conduct is relevant in
determining whether or not to grant Respondent's applications for
registration.
Regarding factor one and Respondent's maintenance of effective
controls against the diversion of listed chemicals, it is undisputed
that the alarm system and physical security at Respondent is adequate
to protect against the diversion of listed chemicals. However as the
Government argued, not only did Respondent not maintain effective
controls against diversion in its transactions with the individual from
West Virginia and then California, it actively engaged in diversion. It
shipped ephedrine to the individual on 22 separate occasions knowing
that the ephedrine would be used in the illicit manufacture of
methamphetamine. Respondent intentionally falsified its invoices to
conceal the actual contents of the shipments to avoid DEA's
recordkeeping requirements.
In addition, Respondent engaged in at least 36 transactions
involving listed chemicals with Select Health, a company not registered
with DEA to handle listed chemicals. Pursuant to 21 CFR 1310.07(a), it
was Respondent's responsibility to properly identify the other party to
a transaction by verifying the identity or registration status of the
other party. Here there is no evidence in the record that Respondent
attempted to ascertain the registration status of Select Health. As a
result, Respondent shipped approximately 3.5 million dosage units
[[Page 59218]]
of listed chemicals to a company not authorized by DEA to handle the
chemical. Respondent's failure to ascertain the registration status of
Select Health is further evidence of Respondent's failure to maintain
effective controls against the diversion of listed chemicals.
As to factor two, Respondent's compliance with applicable law, the
Government contends that Respondent failed to report to DEA
transactions involving an ``extraordinary quantity'' of a listed
chemical. Pursuant to 21 CFR 1210.05(a)(1) (1990 & 1991), a regulated
person was required to report to DEA ``(a)ny regulated transaction
involving an extraordinary quantity of a listed chemical.'' At the time
of the 22 shipments to the California individual, Respondent was
considered a regulated person and the shipments were considered
regulated transactions. See 21 CFR 1310.01(e) and (f)(1) (1990 & 1991).
The question then becomes whether these transactions involved an
``extraordinary quantity'' of a listed chemical requiring that they be
reported to DEA.
``Extraordinary quantity'' is not defined. In a previous case, the
Deputy Administrator evaluated the amount of listed chemical used for
various purposes within the manufacturing industry and determined
whether the amounts in question were ``extraordinary'' given the buyer
the buyer's stated purpose. See Alfred Khalily, Inc., d/b/a Alfa
Chemical, 64 FR 31289 (1999). However in this case, no such evaluation
can be conducted. The Government did not present any evidence as to why
the amount of ephedrine hydrochloride powder shipped to the individual
by Respondent should be considered ``extraordinary.'' Therefore, the
Deputy Administrator agrees with Judge Randall that the Government
``has failed to prove by a preponderance of the evidence that any of
the transactions between the Respondent and (the individual) or Select
Health involved an `extraordinary quantity' of ephedrine or any other
listed chemical.'' Thus there is no basis for the Deputy Administrator
to conclude that Respondent violated 21 CFR 1310.05(a)(1).
The Government also asserts that pursuant to 21 U.S.C. 841(d)(3) it
is unlawful for any person to knowingly or intentionally, ``with the
intent of causing the evasion of the recordkeeping or reporting
requirements of (the CSA) * * * (to) receive() or distribute() a
reportable amount of any listed chemical in units small enough so that
the making of records or filing of reports under (the CSA) is not
required.'' From March 22, 1990 through January 2, 1991, Respondent
made 22 shipments of ephedrine powder to the California individual and
altered invoices to reflect sales of ephedrine tablets rather than
ephedrine powder because no records were required for the shipment of
ephedrine tablets in 1990 and 1991. Therefore, the Deputy Administrator
concludes that Respondent failed to properly record and report these
shipments of ephedrine powder and intentionally misrepresented the
shipments on its invoices in violation of 21 U.S.C. 841(d)(3).
The Government further asserts that Respondent violated 21 U.S.C.
841(d)(2) which makes it unlawful for any person to knowingly or
intentionally, ``possess() or distribute() a listed chemical knowing,
or having reasonable cause to believe, that the listed chemical (would)
be used to manufacture a controlled substance.'' In his plea agreement,
Mr. Occhifinto stipulated that he knew that he had received funds from
the individual originating from unlawful activity involving the
manufacture and distribution of controlled substances. Therefore, the
Deputy Administrator agrees with Judge Randall that ``Respondent,
through Mr. Occhifinto, knew or had reason to believe that the
ephedrine hydrochloride powder shipped to (California individual) would
be used for diversionary purposes in violation of 21 U.S.C.
841(d)(2).''
The evidence also supports a conclusion that Respondent failed to
ascertain whether Select Health was registered with DEA as required by
21 CFR 1310.07. Respondent was clearly aware of its responsibilities as
evidenced by a letter it placed into evidence signed by its Senior Vice
President to its customers indicating that Respondent needed a copy of
its customers' registrations. However, there is no indication that
Select Health received a copy of this letter. It is undisputed that
Respondent shipped listed chemicals to Select Health from January 6 to
October 28, 1998, without Select Health being registered with DEA or
submitting a timely application for such registration.
The Government also contends that Respondent materially falsified
its applications for registration in violation of 21 U.S.C.
843(a)(4)(A), by providing false information in explanation of its
affirmative responses to the liability questions. Respondent however
argues that it did not materially falsify its applications because it
answered ``Yes'' to the liability questions; an explanation was
offered; DEA was aware of Mr. Occhifinto's convictions at the time of
the May 1997 applications; and neither Mr. Occhifinto nor Respondent
had a motive to attempt to conceal Mr. Occhifinto's prior convictions.
The Deputy Administrator agrees with Judge Randall that the
Government has failed to establish that Respondent materially falsified
its applications since it did answer ``Yes'' to the liability
questions. However, 21 U.S.C. 843(a)(4)(A) also makes it unlawful for
any person to knowingly or intentionally ``omit any material
information from any application * * *.'' Here, Respondent clearly
failed to disclose on its applications Mr. Occhifinto's hashish
convictions or his money laundering conviction. This omission is
clearly material since Mr. Occhifinto is Respondent's president and
from Respondent's explanation provided on the applications, DEA would
not have been on notice of his convictions. The Deputy Administrator
agrees with Judge Randall that ``(d)espite the Respondent's argument to
the contrary, the absence of this information may be considered a
material omission regardless of whether the DEA previously was aware of
the convictions. * * * The registration application and the applicable
law do not provide any exceptions for withholding information that
already may be within the DEA's purview.'' Therefore, the Deputy
Administrator concludes that Respondent omitted material information
from its applications in violation of 21 U.S.C. 843(a)(4)(A).
The Deputy Administrator notes that there very well may have been a
further material omission of information on the applications. Evidence
introduced at the hearing by Respondent indicates that Mr. Occhifinto's
traveling companion who gave him the bottles containing hashish was
named Roland Bossi, and that Mr. Bossi was convicted of controlled
substance related offenses. Further evidence introduced by Respondent
indicates that the September 1997 letter sent to Respondent's customers
regarding the need for a copy of customers' DEA registrations was
signed by a Ron Bossi, Senior Vice President. The Deputy Administrator
is concerned that this may be the same individual, however the
Government presented no evidence to support such a conclusion.
Therefore, the Deputy Administrator has not considered these suspicions
in rendering his decision in this matter.
Pursuant to factor three, Mr. Occhifinto's convictions can be
considered since he is Respondent's president. It is undisputed that in
1991,
[[Page 59219]]
Mr. Occhifinto was convicted of four counts relating to the smuggling
of hashish. Mr. Occhifinto was sentenced to probation based upon his
minimal participation. Further, Mr. Occhifinto, was also convicted in
1991 following his guilty plea to one count of money laundering as it
related to his shipments of listed chemicals to the California
individual. Mr. Occhifinto was ultimately sentenced in 1996 to 18
months incarceration followed by three years of supervised release.
As discussed under factor two, evidence in the record seems to
suggest that Respondent's Senior Vice President, who appeared to have a
much more significant role in the hashish smuggling endeavor was also
convicted of controlled substance-related offenses. However, since no
evidence was presented by the Government to indicate that it is the
same individual, the Deputy Administrator has not relied on this
information in rendering his decision.
Regarding factor four Respondent's experience in manufacturing and
distributing listed chemicals, Respondent has manufactured and
distributed pharmaceutical products since 1986. However, the record is
clear that Respondent distributed listed chemicals from March 22, 1990
through January 2, 1991 knowing that they were to be used in the
illicit manufacture of methamphetamine. In addition, as recently as
1998, Respondent was responsible for the distribution of approximately
3.5 million dosage units of a listed chemical to an unregistered
customer.
As to factor five, Respondent's product was found at clandestine
laboratories in 1990, which initiated the investigation of Respondent,
and in 1998. While the evidence in the record does not support a
finding that Respondent knew or had reason to believe that these
chemicals were being diverted to the illicit manufacture of controlled
substances, the Deputy Administrator agrees with Judge Randall that
``[d]espite what efforts the Respondent may be making to prevent such
an occurrence, these products have been diverted.''
The Deputy Administrator agrees with Judge Randall that the
Government has presented a prima facie case for denial of Respondent's
applications for registration. However, there is evidence in the record
regarding Mr. Occhifinto's extensive cooperation with law enforcement,
his acceptance of responsibility for his actions, and his active
involvement in religious and community-related charitable activities.
Further, Mr. Occhifinto did not attempt to hide Respondent's dealings
with Select Health and in fact reported to DEA that Select Health was
not registered. But as Judge Randall noted, ``(w)hile the Respondent
may be recognized for its efforts in reporting this violation to the
DEA, refraining from any future transactions with Select Health, and in
hiring a regulatory affairs representative, the fact remains that had
greater preventative actions been taken, the thirty-six unlawful
transactions never would have occurred. Remedial efforts are not
superior to preventative actions.''
In her opinion, Judge Randall indicated that she is troubled by
DEA's lack of action in this matter since the shipments to the
California individual occurred in 1990 and 1991. Judge Randall stated
that ``(b)y failing to act against the Respondent from 1991 until the
Order to Show Cause in 1998, the Government has weakened its
credibility in its argued concern for the public interest in light of
the Respondent's past business activities. If the DEA believed then,
what it now purports to argue, it should have acted at the time to
limit or prohibit the Respondent's, or at least Mr. Occhifinto's,
handling of listed chemicals.'' The Deputy Administrator disagrees with
Judge Randall. There was no action that DEA could have taken, short of
the criminal action that it did, or possibly civil action. Respondent
did not even apply for registration until May 1997 and all applicants
who submitted their applications by a specific date were allowed to
continue in operation until action was taken regarding the applications
Judge Randall concluded, and the Deputy Administrator agrees, that
despite Mr. Occhifinto's cooperation with law enforcement, his
willingness to comply with DEA security requests, and his activities
within the community, it is inconsistent with the public interest to
issue Respondent a DEA registration. Respondent has failed to maintain
effective controls against diversion as evidenced by its shipments to
the California individual. Mr. Occhifinto has been convicted of two
offenses related to the handling of controlled substances and listed
chemicals. As recently as 1998, Respondent made a number of shipments
of a listed chemical to an unregistered customer. Finally, no
assurances have been made by Respondent that procedures are in place to
prevent future transgressions. While Respondent has apparently hired a
regulatory compliance officer, no evidence was presented concerning
that individual's duties, responsibilities, and authority within
Respondent. Also, no evidence was presented as to the extent of Mr.
Occhifinto's participation in the daily operations of Respondent. As a
result, the Deputy Administrator agrees with Judge Randall that one
cannot ``adequately assess the weight to be given Mr. Occhifinto's
prior egregious misconduct in determining the course of business to be
followed in the future by the Respondent.'' Therefore, the Deputy
Administrator concludes that Respondent's registration with DEA would
be inconsistent with the public interest.
Accordingly, the Deputy Administrator of the Drug Enforcement
Administration, pursuant to the authority vested in him by 21 U.S.C.
823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that the
applications for registration as an exporter of List I chemicals and as
a manufacturer for distribution of List I chemicals, submitted by NVE
Pharmaceuticals, Inc., be, and they hereby are, denied. This order is
effective December 2, 1999.
Dated: October 25, 1999.
Donnie R. Marshall,
Deputy Administrator.
[FR Doc. 99-28603 Filed 11-1-99; 8:45 am]
BILLING CODE 4410-09-M
