5 March 2002
Source: http://www.access.gpo.gov/su_docs/aces/fr-cont.html

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[Federal Register: March 5, 2002 (Volume 67, Number 43)]
[Notices]
[Page 9997-9998]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05mr02-75]

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Yemen Wholesale Tobacco and Candy Supply, Inc.; Revocation of
Registration

    On January 9, 2001, the Administrator of the Drug Enforcement
Administration (DEA), issued an Order to Show Cause (OTSC) to Yemen
Wholesale Tobacco and Candy Supply, Inc. (Yemen), located in Yonkers,
New York, notifying it of a preliminary finding that, pursuant to
evidence set forth therein, it was responsible fro the diversion of
large quantities of List I chemicals into other than legitimate
channels. Based on these preliminary findings, and pursuant to 21
U.S.C. 824(d) and 28 CFR Secs. 0.100 and 0.104, the OTSC suspended
Yemen's DEA Certificate of Registration, effective immediately, with
such suspension to remain in effect until a final determination is
reached in these proceedings. The OTSC informed Yemen of an opportunity
to request a hearing to show cause as to why the DEA should not revoke
its DEA Certificate of Registration, 003952YAY, and deny any pending
applications for renewal or modification of such registration, for
reason that such registration is inconsistent with the public interest,
as determined by 21 U.S.C. 823(h). The OTSC also notified Yemen that,
should no request for hearing be filed within 30 days, its right to a
hearing would be considered waived.
    On January 9, 2001, a copy of the OTSC was served upon Hasham
Alkaifi, Vice President of Yemen. No request for a hearing or any other
response was received by DEA from Yemen or Alkaifi nor anyone
purporting to represent the registrant in this matter. Therefore, the
Administrator of the DEA, finding that (1) thirty days having passed
since receipt of the Order to Show Cause, and (2) no request for a
hearing having been received, concludes Yemen is deemed to have waived
its right to a hearing. After considering relevant material from the
investigative file in this matter, the Administrator now enters his
final order without a hearing pursuant to 21 CFR 1301.43 (d) and (e)
and 1301.46.
    The Administrator finds as follows. List I chemicals are chemicals
that may be used in the manufacture of a controlled substance in
violation of the Controlled Substances Act. 21 U.S.C. 802(34); 21 CFR
1310.02(a). Pseudoephedrine is a List I chemical that is commonly used
to illegally manufacture methamphetamine, a Schedule II controlled
substance. Methamphetamine is an extremely potent central nervous
system stimulant, and its abuse is a growing problem in the United
States.
    A ``regulated person'' is a person who manufactures, distributes,
imports, or exports inter alia a listed chemical. 21 U.S.C. 802(38). A
``regulated transaction'' is inter alia a distribution, receipt, sale,
importation, or exportation of a threshold amount of a listed chemical.
21 U.S.C. 802(39). The Administrator finds all parties mentioned herein
to be regulated, and all transactions mentioned herein to be regulated
transactions, unless otherwise noted.
    Yemen became registered with the DEA January 25, 1999, as a
distributor if List I chemicals. During the pre-registration inspection
of Yemen's premises, Yemen was asked to provide a list of proposed
suppliers of List I chemical products, and a list of proposed customers
for its List I chemical products. DEA investigators subsequently
attempted to contact each of the proposed suppliers and customers.
Investigation showed that Yemen had made no arrangements with any of
the suppliers or customers.
    On or about August 18, 1999, 802 bottles of 60 count, 60 mg.
pseudoephedrine tablets were sized en route to an individual in
Oakland, California. The address was not a DEA registered location
authorized to handle List I chemicals. The investigation showed the
bottles originated from Yemen, and were sent to Oakland from a business
called ``One Hour Photo'' in New York, also not authorized by DEA to
buy or sell List I chemicals.
    On August 30, 1999, DEA investigators seized 1,056 bottles of 120
count, 60 mg. pseudoephedrine tablets from a public storage facility in
San Pablo, California. The storage facility was not a DEA registered
location authorized to handle List I chemicals. An individual was
arrested at the time of this seizure, and an additional 3,408 bottles
of the same product were seized from his vehicle. The DEA investigation
revealed all 4,464 bottles originated from Yemen.
    On October 5, 1999, DEA investigators interviewed the arrested
individual referenced in the preceding paragraph. That individual
stated that Mr. Alkafa, President of Yemen, was one of a number of
persons who diverted pseudoephedrine from the East Coast to the West
Coast. He further stated that those who wanted to purchase
pseudoephedrine for the illicit manufacture of methamphetamine would
purchase a money order at his market, made payable to Alkafa. The money
order would be sent to Alkafa, who would deliver the pseudoephedrine to
California.
    On or before December 8, 1999, Yemen received a Warning Letter from
DEA. This letter informed Yemen that its List I chemical product,
labeled ``Action Release'' pseudoephedrine, had been discovered in
various illicit settings consistent with the illicit manufacture of the
controlled substance methamphetamine. The letter specified two
locations; one at San Pablo, California in August, 1999, the other at
Oakland, California, in August, 1999.
    The DEA investigation also revealed Yemen purchased in excess of
3,594,000 dosage units of 60 mg. pseudoephedrine tablets subsequent to
the receipt of this Warning Letter, between February 4, 2000, and July
25, 2000.
    On August 7, 2000, a criminal search warrant was served upon Yemen.
The search revealed Yemen kept no records of its purchases or sales of
pseudoephedrine. The DEA investigation showed, however, that Yemen
purchased approximately 26 million dosage units of pseudoephedrine from
various suppliers between November 22, 1999, until July 25, 2000.
    Also during the August 7, 2000, execution of the search warrant,
DEA investigators discovered Yemen had stored approximately 1.6 million
dosage units of 60 mg. pseudoephedrine in an off-site storage unit at
an unregistered address. This pseudoephedrine was seized, and Hasham
Alkaifi, Vice President of Yemen and nephew of Alkafa, was interviewed.
He stated to investigators that Alkafa was in Yemen (the country), but
was continuing to order pseudoephedrine on behalf of Yemen Wholesale.
Alkaifi had rented the storage unit and stored the pseudoephedrine
there at Alkafa's director. Alkaifi was not aware of any customers for
the 1.6 million dosage units at the storage facility.
    Therefore, pursuant to 21 U.S.C. 824(d), the Administrator of the
DEA issued an immediate suspension of Yemen's DEA Certificate of
Registration. While the above-cited evidence provides ample grounds for
an immediate suspension pursuant to Sec. 824(d), these grounds also
provide the

[[Page 9998]]

basis for the revocation of Yemen's DEA Certificate of Registration.
    Pursuant to 21 U.S.C. 824(a), the Administrator may revoke a
registration to distribute List I chemicals upon a finding that the
registrant has committed such acts as would render his registration
under section 823 inconsistent with the public interest as determined
under this section. Pursuant to 21 U.S.C. 823(h), the following factors
are considered in determining the public interest:
    (1) Maintenance of effective controls against diversion of listed
chemicals into other than legitimate channels;
    (2) Compliance with applicable Federal, State, and local law;
    (3) Any prior conviction record under Federal or State laws
relating to controlled substances or to chemicals controlled under
Federal or State law;
    (4) Any past experience in the manufacture and distribution of
chemicals; and
    (5) Such other factors as are relevant to and consistent with the
public health and safety.
    Like the public interest analysis for practitioners and pharmacies
pursuant to subsection (f) of section 823, these factors are to be
considered in the disjunctive; the Administrator may rely on any one or
combination of factors and may give each factor the weight he deems
appropriate determining whether a registration should be revoked or an
application for registration be denied. See, e.g. Energy Outlet, 64 FR
14,269 (1999). See also Henry J. Schwartz, Jr., M.D., 54 FR 16,422
(1989).
    Regarding the first factor, maintenance of effective controls
against diversion, the Administrator finds substantial evidence in the
investigative file that Yemen and Alkafa actively participated in the
illegal diversion of pseudoephedrine knowing it would be used to
manufacture methamphetamine.
    Regarding the second factor, compliance with applicable Federal,
State, and local law, the investigative file that Yemen and Alkafa, and
Alkaifi significantly violated applicable law in the following primary
instances: first, by trafficking List I chemicals knowing that they
would be diverted to the illicit manufacture of methamphetamine;
second, by failing to keep and maintain required records; and third, by
failing to report suspicious transactions. The confession of the
individual arrested in California implicated Yemen and Alkafa in the
active diversion of pseudoephedrine to the illicit manufacture of
methamphetamine; the DEA search of August 7, 2000, revealed Yemen
failed to keep or maintain any records of its pseudoephedrine sales and
purchases whatsoever; and the DEA investigation showed Yemen failed to
report various suspicious transactions (money orders from California
for List I chemical products; sales to individuals not registered with
DEA as authorized to handle List I chemicals; failure to report
transactions involving extraordinary quantities of a listed chemical).
    The Administrator thus finds substantial evidence showing Yemen and
Alkafa violated 21 U.S.C. 841(d)(1) (possession of a listed chemical
with intent to manufacture a controlled substance); 841(d)(2)
(possession/distribution of a listed chemical knowing or having
reasonable cause to believe, that the listed chemical will be used to
manufacture a controlled substance); 841(g)(1) (knowing distribution of
a listed chemical in violation of the Controlled Substances Act);
841(g)(2) (possession of a listed chemical with knowledge that
recordkeeping or reporting requirements not adhered to); 842(a)(5) and
(10) (failure to keep required records); and 830(b)(1)(a) (failure to
report any regulated transaction involving an extraordinary quantity of
a listed chemical, an uncommon method of payment or delivery, or any
other circumstance the regulated person believes may indicate that the
listed chemical will be used in violation of this subchapter). (Note:
subparagraphs (d) and (g) of 841 have been redesignated as (c) and
(f)).
    Regarding the third factor, any prior conviction record under
Federal or State laws relating to controlled substances or chemicals,
there is no evidence in the investigative file that Yemen, Alkafa, or
Alkaifi have any record of convictions under Federal or State laws
relating to controlled substances or chemicals.
    Regarding the fourth factor, past experience in the manufacture and
distribution of chemicals, the Administrator finds substantial evidence
in the investigative file that Yemen and Alkafa actively participated
in the illegal trafficking of pseudoephedrine, knowing that it was
being diverted to the manufacture of methamphetamine, and completely
ignored the responsibilities of a DEA registrant. Yemen was shipping
pseudoephedrine individuals in California not registered with DEA.
Yemen purchased almost 26 million dosage units of pseudoephedrine
during an eight month period, yet failed to keep required records
concerning these purchases and sales. At the time of the service of the
criminal search warrant, Yemen continued to stockpile 1.6 million
dosage units of pseudoephedrine in an unregistered off-site storage
unit facility, for no stated legitimate purpose. The Administrator
concludes that there is substantial evidence in the investigative file
that this pseudoephedrine was also intended to be diverted to the
illicit manufacture of methamphetamine.
    Regarding the fifth factor, such other factors relevant to and
consistent with the public safety, the Administrator finds substantial
evidence that Yemen significantly violated applicable law by illegally
trafficking millions of dosage units of pseudoephedrine knowing it was
being diverted to the manufacture of methamphetamine and further by
failing to keep and maintain required records and failure to report
suspicious listed chemical transactions.
    Accordingly, the 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 DEA
Certificate of Registration 003952YAY, previously issued to Yemen
Wholesale Tobacco and Candy Supply, Inc., be, and it hereby is,
revoked; and any pending applications for renewal or modification of
said registration be, and hereby are, denied. This order is effective
April 4, 2002.

    Dated: February 22, 2002.
Asa Hutchinson,
Administrator.

Certificate of Service

    This is to certify that the undersigned, on February 25, 2002,
placed a copy of the Final Order referenced in the enclosed letter in
the interoffice mail addressed to Brian Bayly, Esq., Office of Chief
Counsel, Drug Enforcement Administration, Washington, DC 20537; and
caused a copy to be mailed, postage prepaid, registered return receipt
to Mr. Nagi Alkafa, Yemen Wholesale Tobacco & Candy Supplies, Inc., 350
South Broadway, Yonkers, New York 10705

Karen C. Grant.

[FR Doc. 02-5222 Filed 3-4-02; 8:45 am]
BILLING CODE 4410-09-M