Anthony D. Funches; Grant of Registration With Condition

[Federal Register Volume 64, Number 56 (Wednesday, March 24, 1999)]
[Notices]
[Pages 14267-14269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7122]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 97-36]


Anthony D. Funches; Grant of Registration With Condition

    On July 31, 1997, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA) issued an 
Order to Show Cause to Anthony Delano Funches (Respondent) of Denver, 
Colorado, notifying him of an opportunity to show cause as to why DEA 
should not deny his application for registration as a retail 
distributor of list I chemicals pursuant to 21 U.S.C. 823(h), for 
reason that his registration would be inconsistent with the public 
interest.
    Respondent filed a request for a hearing on the issues raised by 
the Order to Show Cause. Following prehearing procedures, a hearing was 
held in Denver, Colorado on April 8, 1998, before Administrative Law 
Judge Mary Ellen Bittner. At the hearing both parties called witnesses 
to testify and introduced documentary evidence. After the hearing, 
counsel for the Government submitted proposed findings of fact, 
conclusions of law and argument. On September 9, 1998, Judge Bittner 
issued her Opinion and Recommended Ruling, Findings of Fact, 
Conclusions of Law and Decision, recommending that Respondent's 
application for registration be granted. Neither party filed exceptions 
to her recommended decision, and on October 13, 1998, Judge Bittner 
transmitted the record of these proceedings to the then-Acting 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 
Opinion and Recommended Ruling, Findings of Fact, Conclusions of Law 
and Decision of the Administrative Law Judge, and 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 in 1991 Respondent moved back 
to Colorado and renewed his acquaintance with a married couple who 
owned and operated a store called ``The Connection'' located at 4811 
East Colfax Avenue, Denver, Colorado. Approximately three years later, 
the husband died and his widow inherited The Connection. Respondent 
assisted her in the management of the business and at some print, they 
married. They eventually separated and his wife abandoned the store at 
4811 East Colfax. Respondent obtained a retail business license and 
registered the store under the trade name ``The Other Connection.'' The 
Other Connection sells ephedrine products, as well as items such as 
sunglasses and jewelry, and also provides services such as fax machines 
and notary.
    On August 25, 1995, Respondent applied for a DEA registration as a 
retail distributor of ephedrine and pseudoephedrine \1\ and listed 4811 
East Colfax as the proposed registered location. However in light of 
his divorce settlement, Respondent ultimately moved the business to 
4815 East Colfax.\2\ In his application, Respondent answered ``no'' to 
the question which asks, ``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?''
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    \1\ The parties stipulated that a DEA registration is not 
required for the retail distribution of pseudoephedrine, and 
therefore the only chemical relevant to this application is 
ephedrine.
    \2\ The Order to Show Cause listed the proposed registered 
location as 4811 East Colfax Avenue, however by letter dated July 
16, 1996, Respondent submitted a request to modify the address on 
his application to reflect 4815 East Colfax Avenue. Since 
Respondent's request to modify his application was submitted prior 
to the issuance of the Order to Show Clause in this matter, 
Respondent was not required to obtain permission from DEA to modify 
his application. See 21 CFR 1309.36(a).
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    On February 6, 1996, a DEA investigator visited The Other 
Connection as part of a preregistration investigation. The investigator 
testified at the hearing in this matter that his inspection revealed 
that Respondent's recordkeeping and security procedures were adequate 
and that Respondent's transactions were ``well documented.'' In 
addition to the on-site visit, the investigator conducted a criminal 
history of Respondent which revealed that on June 1, 1978, Respondent 
and a co-defendant were charged in the District Court in the County of 
Denver, Colorado, with Conspiracy to Sell Narcotic Drugs, Sale of 
Narcotic Drugs, and Possession of a Dangerous Drug in violation of 
Colorado law. On January 17, 1979, Respondent pled guilty to the 
misdemeanor charge of possession of marijuana and the other counts 
against him were dismissed. Respondent was sentenced to 12 months 
imprisonment with the sentence suspended provided that he not be 
``convicted of any state or Federal law, city ordinance other than 
traffic'' and was fined $250.00.
    The investigator testified that further investigation of 
Respondent's conviction revealed a report of a DEA task force officer 
which stated that in August 1977, Respondent and his co-defendant made 
arrangements to sell 56.65 grams of cocaine for $4,000.00 to the 
undercover officer. According to the report, the three met at a 
designated location; the undercover officer presented the other two 
with $4,000.00 in exchange for a package; Respondent opened the package 
so that the undercover officer could sample its contents; and 
respondent requested that he and the co-defendant be allowed to keep 
the remnants of the sample for their own use. According to a laboratory 
analysis report the substance was cocaine and was purchased by the 
undercover officer from the co-defendant on August 4, 1977. 
Respondent's name is not mentioned anywhere in this laboratory analysis 
report.
    Respondent admitted at the hearing in this matter that he was 
present during the alleged cocaine transaction in 1977, but denied 
handling either the money or the package of cocaine. He explained that 
at the time of the transaction he was a professional bodyguard and was 
present during the transaction to provide protection for the co-
defendant. Regarding the marijuana, Respondent conceded that although 
he cannot recall specifically having marijuana in his possession on 
that occasion over 20 years ago, it was possible since ``[i]n those 
years, I was known to have a drink here and there, or a smoke.'' 
However, Respondent testified that he no longer uses illegal drugs.
    In explaining why he indicated on his DEA application that he had 
never been convicted of a crime related to controlled substances, 
Respondent testified that he did not believe that he still had a 
marijuana conviction on his record. It was his understanding that the 
misdemeanor marijuana charge to which he pled guilty would be 
``erased'' from his record after one year. Respondent testified that in 
the 20 years since his conviction, he has undergone the screening 
processes required to

[[Page 14268]]

become a notary public, to redeem weapons out of pawn, and to purchase 
property, and at no time has he ever been informed that there is a 
marijuana conviction on his record.
    In arguing against Respondent's registration, the Government 
concedes that Respondent maintains good records, however it contends 
that Respondent's 1977 misdemeanor conviction, his failure to report 
this conviction on his application for registration, and his failure to 
take responsibility for his role in the alleged 1977 sale of cocaine to 
an undercover officer indicate that Respondent ``does not possess a 
sense of the high responsibilities required of a registrant.'' 
Respondent argues that he did not intend to mislead DEA on his 
application, that he believed that he no longer had a conviction on his 
record, that whatever happened over 20 years ago is not an accurate 
measure of his trustworthiness today, and that DEA's own inspection of 
his store revealed that he is responsible in his security and 
recordkeeping procedures.
    Pursuant to 21 U.S.C. 823(h), 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;
    (5) such other factors as are relevant to and consistent with the 
public health and safety. Like with the factors found in 21 U.S.C. 
823(f) relating to the registration of practitioners to handle 
controlled substances, these factors are to be considered in the 
disjunctive; the Deputy Administrator may properly rely on any one or a 
combination of these factors, and give each factor the weight he deems 
appropriate in determining whether an application should be denied. See 
Henry J. Schwarz, Jr., M.D., 54 F.R. 16,422 (1989).
    Regarding factor one, the DEA investigator who conducted the 
preregistration inspection testified that Respondent's security 
procedures at his store are adequate and that transactions are well 
documented. The Government conceded that Respondent is a ``scrupulous 
recordkeeper as well as attentive to proper controls.''
    As to factor two, the Government alleged that Respondent 
participated in the sale of cocaine to an undercover officer in 1977. 
Judge Bittner found Respondent's testimony credible that he was 
present, but did not participate in the transaction. However, the 
Deputy Administrator finds the DEA task force officer's report 
compelling since it was written at the time of the cocaine transaction. 
The report indicates that Respondent was not only present, but 
participated in the transaction by opening the package so the officer 
could sample its contents and by requesting that he and his co-
defendant be allowed to keep the remnants of the sample for their own 
use. Therefore unlike Judge Bittner, the Deputy Administrator concludes 
that Respondent was involved in the unlawful distribution of cocaine in 
violation of 21 U.S.C. 841(a)(1). The Deputy Administrator also finds 
that Respondent violated Colorado law by being in possession of 
marijuana at the time of his arrest in 1977.
    The Government also alleged that Respondent violated 21 U.S.C. 
843(a)(4)(A) by furnishing false material information in his 
application for registration since he indicated that he had never been 
convicted of a crime related to controlled substances. Respondent 
testified that he did not intend to mislead DEA because he honestly 
believed that his 1979 misdemeanor marijuana possession conviction no 
longer remained on his record. Judge Bittner found Respondent's 
testimony to be credible. The Deputy Administrator agrees with Judge 
Bittner that Respondent did not violate 21 U.S.C. 843(a)(4)(A) because 
he did not intentionally furnish false information on his application 
for registration.
    Regarding factor three, it is undisputed that Respondent was 
convicted of one count of misdemeanor possession of marijuana on 
January 17, 1979, in the District Court in the County of Denver, 
Colorado.
    As to factor four, the record shows that Respondent has been 
involved in the distribution of chemicals since at least 1994, and 
there is no evidence of any wrongdoing. In fact according to the DEA 
investigator, Respondent's recordkeeping and security are adequate.
    Finally regarding factor five, Judge Bittner noted that it is 
appropriate to consider the grounds for revocation of a registration 
found in 21 U.S.C. 824(a), when determining whether to deny an 
application for registration. DEA has consistently held that ``the law 
would not require an agency to indulge in the useless act of granting a 
license on one day only to withdraw it on the next,'' and therefore the 
bases for revocation found in 21 U.S.C. 824(a) are properly considered 
under 21 U.S.C. 823(f)(5). See Alan R. Schankman, M.D., F.R. 45,260 
(1998); Kuen H. Chen, M.D., 58 F.R. 65,401 (1993)). Judge Bittner 
concluded that because of the similar statutory construction and 
legislative intent between 21 U.S.C. 823(f) and 823(h), the grounds for 
revocation found in 21 U.S.C. 824(a) are likewise incorporated into 21 
U.S.C. 823(h)(5). Therefore, the Deputy Administrator agrees with Judge 
Bittner that it is appropriate to consider whether Respondent's 
application for DEA registration should be denied pursuant to 21 U.S.C. 
823(h)(5) and 824(a)(1) on grounds that he materially falsified his 
application.
    There is no dispute that Respondent materially falsified his 
application by indicating that he had never been convicted of a crime 
related to controlled substances. However according to Respondent, he 
believed that he no longer had a conviction on his record, and that 
nothing has occurred in the 20 years since the conviction to alert him 
otherwise. As Judge Bittner noted, a registration may still be revoked 
based upon an unintentional falsification of an application, but a lack 
of intent to deceive is a relevant consideration in determining whether 
a registrant or applicant should possess a DEA registration. See Samuel 
Arnold, D.D.S., 63 F.R. 8687 (1998); Martha Hernandez, M.D., 62 F.R. 
61,145 (1997).
    Here, Respondent's falsification was not based on intentional or 
negligent behavior. Instead, Respondent believed that he no longer had 
a conviction on his record and therefore he believed that he was 
answering the question correctly when he filled out the application for 
registration. The Deputy Administrator agrees with Judge Bittner that 
under these circumstances it would be too sever a sanction to deny 
Respondent's application for registration based upon his falsification 
of his application.
    Judge Bittner recommended that Respondent should be issued a DEA 
Certification of Registration. While there is no dispute that 
Respondent operated his business today in a responsible manner, the 
Deputy Administrator is extremely troubled by Respondent's failure to 
acknowledge the nature of his involvement in the 1977 cocaine

[[Page 14269]]

transaction. The Deputy Administrator agrees that it would not be in 
the public interest to deny Respondent's application. However, given 
Respondent's failure to accept responsibility for his past behavior, 
Respondent should be subject to greater scrutiny. Therefore, the Deputy 
Administrator concludes that for three years after issuance of the DEA 
Certification of Registration, Respondent shall permit the inspection 
of his premises without an administrative inspection warrant or other 
means of entry.
    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 
application for registration as a retail distributor of ephedrine, 
submitted by Anthony Delano Funches, be, and it hereby is, granted 
subject to the above described condition. This order is effective upon 
issuance of the DEA Certification of Registration, but not later than 
April 23, 1999.

    Dated: March 17, 1999.
Donnie R. Marshall,
Deputy Administrator.
[FR Doc. 99-7122 Filed 3-23-99; 8:45 am]
BILLING CODE 4410-09-M