# Perry County Food & Drug Decision and Order

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2015-28723

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** November 12, 2015
- **Citation:** 80 FR 70084

## Text

DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 15-10]
Perry County Food & Drug Decision and Order

On May 13, 2015, Chief Administrative Law Judge (CALJ) John J. Mulrooney, Jr., issued the attached Recommended Decision (hereinafter, cited as R.D.
1

). Thereafter, on June 15, 2015, the CALJ forwarded the record to this Office for Final Agency Action noting that neither party had filed exceptions to the Recommended Decision.
See
21 CFR 1316.66 (providing a party with the right to file exceptions to an ALJ's decision “[w]ithin twenty days after the date upon which [it] is served [with] a copy”).

1
All citations to the Recommended Decision are to the slip opinion as issued by the CALJ.

Subsequently, on July 8, 2015, Respondent filed with this Office a pleading entitled as its “Closing Brief.” In a letter accompanying the filing, Respondent's counsel explained that the Recommended Decision had been mailed to his former address and that he had recently changed his address and had “only recently received” the CALJ's Recommended Decision. Letter of Respondent's Counsel to Acting Deputy Administrator, DEA (July 8, 2015).

Upon reviewing the letter, I noted that while Respondent's Counsel had explained that he had only recently received the Recommended Decision because it had been mailed to his former address, his filing was nonetheless untimely. Order of the Acting Administrator, at 1 (July 13, 2015). I therefore directed Respondent's Counsel to explain why “this constitute[d] good cause”; I also directed Respondent's Counsel to address why he did not notify the Office of Administrative Law Judges (OALJ) of his new address, as well set forth the date on which he received the decision.
Id.

In response, Respondent's Counsel explained that he was “not now attempting to add exceptions to the record,” that he had previously received the decision on May 13, 2015, and that he “had not filed any exceptions to it due to [his] understanding that exceptions are not necessary under the regulations.” Letter of Respondent's Counsel to Acting Administrator, at 1 (July 14, 2015). Respondent's Counsel further explained that he had sent his previous letter to the Acting Deputy Administrator because he had received a copy of the CALJ's letter transmitting the record, and that he sent his letter “in an abundance of caution due to [his] misunderstanding of the purpose of ” the CALJ's letter, as he “did not want the fact that [he] had not filed any exceptions . . . to preclude” this Office from “perform[ing] an independent review of the record and Decision.”
Id.
at 1-2.

Taking Respondent's Counsel at his word, I do not consider the filing submitted on July 8, 2015. However, in reviewing the record, I have considered the “Closing Brief ” Respondent's Counsel submitted on April 27, 2015, following the conclusion of the evidentiary phase of the proceeding.

Having considered the entire record in this matter, I have decided to adopt the factual findings of the Recommended Decision except as discussed below.
2

I also adopt but modify the CALJ's legal conclusions as discussed below.
3

Because I agree with the CALJ's conclusion that Respondent's evidence as to its acceptance of responsibility and remedial measures is not persuasive, I further adopt the CALJ's Recommendation to the extent that it recommends that I deny any pending application to renew its registration.
4

2
The United States Supreme Court has explained my obligations under the Administrative Procedure Act, as well as the role of the ALJ's recommended decision, in reviewing the record and making factual findings.
See Universal Camera Corp.
v.
NLRB,
340 U.S. 474, 496 (1951) (“The `substantial evidence' standard is not modified in any way when the Board and its examiner disagree. . . . The findings of the examiner are to be considered along
with the consistency and inherent probability of testimony.
The significance of his report, of course, depends largely on the importance of credibility in the particular case.”) (emphasis added). The standard of review of an agency decision is also well settled. Accordingly, I decline to publish the ALJ's discussion of the substantial evidence test and the standard of review.

3
I do not adopt the ALJ's statement (at R.D. 49) that “Regarding Factor 2, in requiring an examination of a registrant's experience in dispensing controlled substances, Congress manifested an acknowledgement that . . . the quantitative volume in which an applicant has engaged in the dispensing of controlled substances may be [a] significant factor[ ] to be evaluated” in the public interest determination.
See JM Pharmacy Group, Inc., d/b/a Farmacia Nueva and Best Pharma Corp.,
80 FR 28667, 28667-68 n.2 (2015);
see also Syed Jawed Akhtar-Zaidi, M.D.,
80 FR 42962, 42967-68 (2015).

4
Because I find that Respondent's registration has expired,
see infra
note 16, I do not adopt the ALJ's recommendation that I revoke its registration.

In this matter Respondent stipulated (and other evidence shows) that its Pharmacist-in-Charge, Chris Watson, who is also the son of its owner Tom Watson, committed multiple acts resulting in the diversion of controlled substances. These include:

(1) Dispensing controlled substances including hydrocodone (a schedule II drug) to A.R. without a prescription. Stipulation 13. Additional record evidence shows that on nine occasions between June 18, 2014 and December 29, 2014, Respondent dispensed controlled substances including hydrocodone and oxycodone (also a schedule II drug) to A.R. listing a dentist (Dr. Hambuchen) as the prescriber. GX 4. However, Dr. Hambuchen denied knowing A.R. (GX 3) and testified to this in the proceeding. Tr. 23. The parties further stipulated that Dr. Hambuchen never issued a prescription for A.R. ALJ Ex. 15, at 4. Each of these acts constitutes an outright drug deal in violation of 21 U.S.C. 841(a)(1), which provides that “[e]xcept as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally . . . to distribute[ ] or dispense . . . a controlled substance[.]”).
See also id.
§ 842(a)(1) (“It shall be unlawful for any person . . . who is subject to the requirements of part C to distribute or dispense a controlled substance in violation of section 829 of this title[.]”);
id.
§ 829(a).
5

5
21 U.S.C. 829(a) sets forth the prescription requirement applicable to the dispensing of a schedule II drug. It provides, in relevant part, that: “[e]xcept when dispensed directly by a practitioner, other than a pharmacist, to an ultimate user, no controlled substance in schedule II, which is a prescription drug . . . may be dispensed without the written prescription of a practitioner, except [for] in emergency situations, as prescribed . . . by regulation,” allowing for an oral prescription.
See also
21 CFR 1306.11(a).

(2) A. Dispensing hydrocodone and alprazolam to Ms. Samantha Pemberton, who the evidence shows was Chris Watson's girlfriend, on November 19, 2014, without a prescription for either drug. Stipulation 19. For the same reasons as described above, these dispensings also constitute violations of 21 U.S.C. 841(a)(1).
See also
21 U.S.C. 842(a)(1);
id.
§ 829(b).
6

6
21 U.S.C. 829 (b) sets forth the prescription requirement applicable to the dispensing of a schedule III or IV drug. It provides that “[e]xcept for when dispensed directly by a practitioner, other than a pharmacist, to an ultimate user, no controlled substances in schedule III or IV, which is a prescription drug . . . may be dispensed without a written or oral prescription.”
See also
21 CFR 1306.21(a).

B. The evidence also shows that on November 19, 2014, Ms. Pemberton was stopped for driving a vehicle without a license plate. ALJ Ex. 20, at 9. During a consensual search of Ms. Pemberton's purse, a police officer found both Xanax (in an unmarked vial) and hydrocodone, and took Ms. Pemberton into custody.
Id.
at 10. During several interviews, Ms. Pemberton claimed that she had a prescription for both drugs.
Id.
She also stated that she had just filled prescriptions for the drugs at

Respondent and had received them in unmarked bottles; however, she could not name the prescriber.
Id.

C. The evidence further shows that during the course of the police investigation of how Ms. Pemberton had obtained the controlled substances, Chris Watson admitted to a Detective that Pemberton had been in Respondent that morning and that he provided the drugs without prescriptions.
Id.
at 11. Watson then stated that he had “ ‘loaned’ her some pills . . . ‘because she was out,’ ” but then asserted that “we are just waiting on [the doctor's office] to call back because that office is notoriously slow.’ ”
Id.
However, according to the credited testimony of the Detective who interviewed Watson, Watson gave him “conflicting information about the identity of Ms. Pemberton's prescribing physician,” initially stating that it was a Dr. Humbard.
Id.
at 12. While Watson agreed to provide the Detective with a copy of the prescriptions, the next day, he faxed over copies of the dispensing labels (but not the actual prescriptions), which indicated that the prescriptions had been filled on October 9, 2014 (and not November 19, 2014), and the labels indicated that the prescriber was a different doctor (Dr. Arnold) than reported by Watson.
Id.
Moreover, the labels for both drugs showed that no refills were authorized.
Id.

D. The next day, the Detective again called Respondent and spoke with Chris Watson seeking the prescriptions.
Id.
After Watson stated that he had faxed over the labels, the Detective told Watson that he needed the prescriptions.
Id.
Watson stated that he would have one of the pharmacy technicians look up the prescriptions and send it to the Detective; later that day, the Detective received a fax which appeared to list called-in prescriptions.
Id.
at 13. While the document listed a prescription for Ms. Pemberton, the date appeared to be either October 4 or October 9, 2014 and not November 19, 2014.
Id.

E. Subsequently, Ms. Pemberton provided the Detective with copies of two prescriptions; the prescriptions listed the date of issuance as October 9, 2014 and Dr. Arnold as the prescriber.
Id.
However, according to the stipulated testimony of a DEA Task Force Officer who interviewed Dr. Arnold, Arnold “stated that he had never prescribed any controlled substances for Ms. Pemberton.” ALJ Ex. 20, at 19. Thus, even the October prescriptions were fraudulent.
7

7
I decline, however, to adopt the CALJ's further finding that Chris Watson's actions in “generating false documents and supplying them to law enforcement to cover his tracks in supplying Samantha Pemberton with drugs . . . stand[s] out as worthy of separate consideration under Factor 5.” R.D. at 58. At no point did the Government argue that Watson's actions with respect to the creation and provision of these documents to the local police constitute actionable misconduct under factor five, and while Respondent stipulated to the testimony, I conclude that the issue was “incidental” to the principal issues in the case.
See, e.g., Yellow Freight System, Inc.
v.
Martin,
954 F.2d 353, 358 (6th Cir. 1992) (An “agency may not base its decision upon an issue the parties tried inadvertently. Implied consent is not established merely because one party introduced evidence relevant to an unpleaded issue and the opposing party failed to object to its introduction. It must appear that the parties understood the evidence to be aimed at the unpleaded issue. Also, evidence introduced at a hearing that is relevant to a pleaded issue as well as an unpleaded issue cannot serve to give the opposing party fair notice that the new, unpleaded issue is entering the case.”) (citations omitted);
see also NLRB
v.
Majestic Weaving Co.,
355 F.2d 854, 861-62 (2d Cir. 1966) (where Government's case focuses on other issues and evidence of uncharged violations is “at most incidental,” the incidental issue cannot support a sanction); 5 U.S.C. 554(b) (“Persons entitled to notice of an agency hearing shall be timely informed of . . . the matters of fact
and law
asserted.”) (emphasis added).

(3)A. Distributing controlled substances, including one 1,000-count bottle of hydrocodone 10/325 mg and two bottles of 100-count methadone 10 mg methadone, to one Eric Horton, on or about January 20, 2015, who was arrested following a traffic stop. Respondent stipulated that each of the bottles had Respondent's pharmacy stock stickers on it. Stipulation 21.

B. The evidence also includes snapshots from Respondent's surveillance video camera which show that on January 20, 2015, both Chris Watson and Eric Horton were inside the pharmacy, in the area where it stored its drugs. GX 36. The evidence shows Watson taking a stock bottle, which appears to be of 1,000-count size from the shelves and handing it to Horton, who then went to a counter and proceeded to fill an amber prescription bottle with some of the contents of the 1,000-count bottle.
Id.
The evidence further shows Horton then placing items in a blue tote, after which he proceeded to the pharmacy's shelves, took a stock bottle off a shelf, and showed it to Chris Watson before placing it in a pharmacy bag.
Id.
Thereafter, the evidence shows Horton going into a back room with the pharmacy bag, before returning and then placing the pharmacy bag in the tote.
Id.

C. Horton then went back to another shelf, and returned with another stock bottle which he showed to Chris Watson.
Id.
Horton then took out an amber prescription bottle before disappearing from the camera frame; however, upon reappearing, Horton did not have the stock bottle but appeared to place something in his jacket pocket.
Id.
Horton then took the tote and left the pharmacy.
Id.

D. About ten minutes later, Horton returned to the pharmacy without the blue tote.
Id.
A short while later, Chris Watson pulled a stock bottle from a shelf and placed it on the counter, after which Horton walked to the counter, counted pills, removed several amber pill bottles from under the counter and proceeded to fill them.
Id.
After handing a bottle to Watson, Horton placed one of the bottles in his pocket.
Id.
Horton then obtained a pharmacy bag and placed multiple amber bottles into the bag before leaving the pharmacy.
Id.
The video then shows Horton carrying a blue tote and leaving the store, followed by his placing the tote in the bed of his pick-up truck, before driving away.

E. Later that evening, Horton was arrested by an Arkansas State Trooper on an outstanding warrant following a traffic stop. During an inventory search of Horton's vehicle, the officer found the blue tote along with one 1,000-count bottle of hydrocodone 10/325 mg, two 100-count bottles of methadone 10 mg, and one 100-count bottle of oxycodone 30. Tr. 83; Stipulation 21; GX 36, at 12. Notably, the oxycodone 30 bottle also had Respondent's stock sticker on it. GX 36, at 12.

F. In addition to the above, Respondent stipulated to Ms. Pemberton's testimony that on two occasions she “witnessed [Chris Watson] providing stock bottles of controlled substances to Eric Horton” while attending parties at Watson's home. ALJ Ex. 20, at 9.

I therefore conclude that the evidence shows that on multiple occasions, Chris Watson (and Respondent) unlawfully distributed controlled substances to include hydrocodone, methadone, and oxycodone to Eric Horton.
8

See
21 U.S.C. 841(a)(1).

8
The State Trooper further testified that he found pills in bottles that were mislabeled, as well as pills that were mixed in bottles. Tr. 83. He also found a coke bottle with a lid that could be unscrewed to access a container; inside the container was “a bunch of mixed pills.”
Id.
He also found other coke cans with lids that could be unscrewed and used to hide drugs.
Id.
at 84.

(4) The evidence also shows that on or about September 14, 2014, the Arkansas State Police arrested one Joseph Jackson who had been involved in a motor vehicle accident. Tr. 68-70. According to the unrefuted testimony, local police officers observed a bottle of prescription liquid codeine (with the label scratched off) in the front seat of Jackson's vehicle and the State Trooper testified that Jackson smelled of marijuana. Tr. 70-71. During a search of

the vehicle, the Officer found a black bag which contained “a baggie of marijuana, prescription bottles of drugs, and two handguns,” as well as a 500-count bottle of alprazolam 2 mg which bore Respondent's stock sticker. Tr. 71; Stipulation 22; ALJ Ex. 15, at 16. Because the evidence further shows that Respondent had not filed a controlled substance theft or loss report with DEA “since at least 2012,” I conclude that Respondent unlawfully distributed the 500-count bottle of alprazolam 2 mg. Stipulation 23;
see
21 U.S.C. 841(a)(1).

(5) Other evidence establishes that Chris Watson removed stock bottles of controlled substances from Respondent. Specifically, one of Respondent's employees provided stipulated testimony that she had seen Chris Watson remove stock bottles of hydrocodone and Xanax (alprazolam) from Respondent. ALJ Ex. 20, at 20-21. Still another employee testified that on two occasions he witnessed Chris Watson take 1,000 count bottles of hydrocodone off the shelf and place them in his backpack. Tr. 278-79.

(6) The evidence further shows that on four occasions beginning on November 7, 2014 and ending on December 4, 2014, a DEA Special Agent (S/A) made undercover visits to Respondent during which he presented fictitious controlled substance prescriptions to Chris Watson. ALJ Ex. 15, at 5.

A. On the first occasion, the S/A presented prescriptions for 120 Norco (hydrocodone/acetaminophen) 10/325 mg and 60 Xanax (alprazolam) 2 mg.
9

Id.
at 5-6. According to the S/A, he asked Chris Watson if he “create[d] the script right?”; Watson then told the S/A to add a certain letter to the DEA number he had created and to change the last number of the prescription “to create a more realistic-looking prescription.”
Id.
at 6. Notwithstanding that Watson knew the two prescriptions were fraudulent, he filled them.
Id.; see also
GXs 6, 7, 8.

9
Both prescriptions were written on a single form. GX 6.

B. On November 13, 2014, the S/A returned to Respondent and presented prescriptions for both hydrocodone and alprazolam to Chris Watson. ALJ Ex. 15, at 6. However, Watson told the S/A that he was out of both drugs but would have more the next week.
Id.
The S/A then asked Watson if the letters he had used on the prescriptions for the prescriber's DEA registration number (RF) “were correct?”
Id.
Watson told him to use “RA” instead and wrote the letters down on a piece of paper.
Id.
After the S/A looked at the paper, Watson “scratched out the letters with a pen.”
Id.

C. On November 19, 2014, the S/A returned to Respondent with prescriptions for 240 Norco 10/325 mg (hydrocodone/apap) and 60 Xanax 2 mg which he presented to Watson.
Id.; see also
GX 15, at 1. However, Watson stated that he could not fill the Norco prescription because he had run out “two days earlier” and “would not get any more tablets until the first of the month.”
Id.
The S/A then asked Watson if the DEA number on the prescription “was correct.”
Id.
at 7. Watson told him to change the last digit on the number and then “described how to formulate a DEA number.”
Id.
Watson then told the S/A that “the prescription . . . looked better than most he sees at the pharmacy.”
Id.

The S/A then asked Watson how much it would cost to buy a 1,000-count bottle of hydrocodone; Watson stated: “I don't usually do that.”
Id.
After the S/A told Watson that he was trying to make some extra money, Watson replied that what the S/A did with the pills after the prescriptions had been filled [was] “none of his business.”
Id.
Watson then told the S/A to return to Respondent on the first of the month when the pharmacy would be resupplied with hydrocodone.
Id.
However, there is no evidence that Watson filled the Xanax prescription on this date.

D. On December 4, 2014, the S/A presented fictitious prescriptions for 240 tablets of hydrocodone 10/325 mg and 60 tablets of alprazolam 2 mg to Chris Watson. ALJ EX. 15, at 7. Watson dispensed the prescriptions to the S/A.
Id.; see also
GX 29-30.

E. The evidence thus shows that Watson knowingly distributed both hydrocodone/acetaminophen (a schedule II narcotic) and alprazolam (a schedule IV benzodiazepine) on two occasions, based on fraudulent prescriptions, for a total of four separate acts of unlawful distribution.
See
21 U.S.C. 841(a)(1);
see also id.
§ 843(a)(2) (“It shall be unlawful for any person knowingly or intentionally . . . to use in the course of the . . . distribution[ ] or dispensing of a controlled substance . . . a registration number which is fictitious[.])”;
Cf.
21 CFR 1306.04(a) (“An order purporting to be a prescription issued not in the usual course of professional treatment . . . is not a prescription within the meaning and intent of section 309 (21 U.S.C. 829) and the person knowingly filling such a purported prescription, as well as the person issuing it, shall be subject to the penalties provided for violations of the provisions of law relating to controlled substances.”).

Moreover, I agree with the Government and CALJ that Watson's actions in instructing the S/A, who, in his undercover capacity presented as a drug-seeking patient, as to how to create fraudulent prescriptions which were “more realistic,” constitutes conduct “inconsistent with the public interest,” regardless of whether it is considered under factor two (experience in dispensing controlled substances) or factor five (“[s]uch other conduct which may threaten the public health and safety”). 21 U.S.C. 823(f).
10

10
As found above, Chris Watson clearly knew that the S/A was presenting fraudulent prescriptions when he filled them. In other circumstances, a pharmacist's counseling of a person who he knows to be presenting a fraudulent prescription as to how to create “more realistic” prescriptions (
i.e.,
one which would avoid detection by another pharmacist to whom it was presented) could constitute criminal conduct actionable under factor four even without a conviction.
See
21 U.S.C. 843(a)(3) (“It shall be unlawful for any person knowingly or intentionally . . . to acquire or obtain possession of a controlled substance by misrepresentation, fraud, forgery, deception, or subterfuge[.]”); 18 U.S.C. 2(a) (“Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.”). So too, in other circumstances (
i.e.,
where the person creating the prescriptions is not an agent for the Government), Watson's conduct in filling a prescription, which he knew bore a fictitious registration number, could support a charge of conspiracy to use a fictitious registration number in the course of the distribution or dispensing of a controlled substance.
See
21 U.S.C. 846;
id.
§ 843(a)(2).

(7)A. Other evidence shows that during a search of Chris Watson's home, paper controlled substance prescriptions for both schedule II drugs OxyContin (oxycodone) and combination hydrocodone (with acetaminophen), and schedule IV drugs, including alprazolam, clonazepam, and Soma (carisoprodol), were found in violation of DEA regulations. ALJ EX. 15, at 2. More specifically, DEA regulations require that paper prescriptions be maintained at the registered location.
See
21 CFR 1304.04(h)(2) (“Paper prescriptions for Schedule II controlled substances shall be maintained at the registered location in a separate prescription file.”);
id.
§ 1304.04(h)(4) (“Paper prescriptions for Schedules III, IV, and V controlled substances shall be maintained at the registered location either in a separate prescription file for Schedules III, IV, and V controlled substances only or in such form that they are readily retrievable from the other prescription records of the pharmacy.”).

B. Still other evidence shows that during the execution of a search warrant at Respondent, the pharmacy only had

“partial invoices” for the controlled substances it purchased in December 2014 and January 2015 because Eric Horton “had removed all of the other invoices at PIC Watson's request in early December 2014.” ALJ Ex. 20, at 22. However, under 21 U.S.C. 827(a)(3), “every registrant . . . distributing[ ] or dispensing a controlled substance or substances shall maintain, on a current basis, a complete and accurate record of each such substance received . . . by him.” Moreover, under DEA regulations, these records “must be kept by the registrant and be available, for at least 2 years from the date of such inventory or records, for inspection and copying by authorized employees of” DEA and must be kept at the registered location unless “the registrant has notified the Administration of his intention to keep” the records “at a central location, rather than at the registered location.” 21 CFR 1304.04(a). Likewise, Respondent could not produce its most recent inventory, which apparently had been removed by its PIC notwithstanding that a DEA regulation requires that the inventory be maintained at the registered location. ALJ Ex. 20, at 23;
see also
21 CFR 1304.04(b)(1) (requiring that inventories “be maintained at each registered location”).

(8) Finally, the evidence shows that Respondent would receive shipments of controlled substances such as oxycodone and that the drugs would “frequently disappear overnight.” ALJ Ex. 20, at 20-21. The evidence also shows that “in either August or October 2013, two 1,000-count bottles of carisoprodol were stolen” from Respondent.
Id.
at 22. Yet the evidence also shows that as of January 22, 2015, Respondent had not filed any theft or loss reports (DEA Form 106) with DEA since January 1, 2012.
11

ALJ Ex. 20, at 17; Tr. 175-76; GX 63.

11
While Respondent reported a theft incident in August 2013 which involved oxycodone, hydrocodone, alprazolam, clonazepam, and phenergan with codeine to the Arkansas Board of Pharmacy on a DEA Form 106, the report was never filed with DEA as required by 21 CFR 1301.74(c). Tr. 120.

While Respondent stipulated to most of these acts, this is not the only evidence of misconduct on the part of Respondent's principals. More specifically, the evidence shows that on various occasions, Tom Watson, Respondent's owner and the father of Chris Watson, was provided information by employees and a business partner that Chris Watson was likely diverting controlled substances and failed to take appropriate action.

Mr. Tracy Swaim testified that he had worked at Respondent for 26 years and had served as its PIC from June 1997 until January 2012, when he resigned. Tr. 233, 251. Mr. Swaim further testified that after Chris Watson began working at Respondent as a staff pharmacist (in July 2011), he noticed that Chris Watson “was not being completely legal on some refills” and that he saw this over the course of a month.
Id.
at 251, 253, 263. Mr. Swaim decided that he was not going to remain as the PIC and told Tom Watson that he was not going to remain as the PIC because Chris was “bending the rules” and he (Mr. Swaim) did not “want to go to jail.”
Id.
at 253. Thereafter, Swaim then completed the drug inventory and Chris Watson became Respondent's PIC.
Id.
at 254.

Mr. Swaim, who stayed on as a staff pharmacist with the same hours, further testified that in September 2014, a pharmacy technician (who had worked at Respondent for 31 years,
see
ALJ Ex. 20, at 21), “was having a conversation with Tom [Watson]” during which she told Watson that Chris Watson was “giving stuff away.” Tr. 256-57. Mr. Swaim joined the conversation and told Tom Watson, “Tom, he's handing pills out the window,” and that he was going to give his notice if Watson did not stop Chris's misconduct.
Id.
at 257. Tom Watson replied that he would “put a stop to it” and to “trust me.”
Id.
However, when Mr. Swaim returned to Respondent after several days off, he “asked the girls [the pharmacy techs] if Chris had changed” his behavior and was told “no.”
Id.
Mr. Swaim then gave notice and retired.
Id.

Grant Goode, who was Tom Watson's nephew, worked as a staff pharmacist at Respondent from December 12, 2014 through February 18, 2015.
12

Tr. 271; 273. Mr. Goode testified that he worked approximately 25 hours a week during December 2014, and that in January, he gradually increased his hours until after the middle of January, he was working most of the hours that the pharmacy was open.
Id.
at 271. Mr. Goode testified that when he was not working at Respondent, Chris Watson was the pharmacist.
Id.
at 273.

12
Grant Goode testified that he also worked at Respondent on November 24, 2014. Tr. 271.

Mr. Goode testified that while working at Respondent, he received phone calls from a couple of doctors inquiring about whether their patients had picked up prescriptions written by them, and that after he would inform the doctors that the patients had picked up the prescriptions, the doctors would ask if their patients had filled any other prescriptions. Tr. 275. Goode testified that when he would tell the doctors about the other prescriptions listed in the patients' profiles, the doctors stated that they had not written “any prescriptions for those days.”
Id.
Goode further testified that there were “dozens” of instances in which he looked for the hard copies of controlled substance prescriptions which were listed on the patient profiles but was unable to find them.
Id.
at 274-75.

Mr. Goode testified that he told Tom Watson that he had “talked to a couple of doctors, and that [he] couldn't find any hard copies for those prescriptions.”
Id.
at 276. According to Goode, Watson's reaction was that the prescriptions may have been placed in the wrong file by the pharmacy technicians.
Id.
at 276-78. Mr. Goode further testified that he discovered that Respondent was missing prescriptions and reported this to Tom Watson during the first week of his employment (following December 12, 2014).
Id.
Goode testified that after the conversation he asked the pharmacy technicians about the prescriptions and was told that they “should be in the file.”
Id.
at 278.

Mr. Goode testified to another incident, during which Tom Watson was present at Respondent and “sitting at the desk” when Chris Watson took a 1,000-count bottle of hydrocodone off the pharmacy's shelves and placed it in his backpack.
Id.
at 278-80. Mr. Goode testified that “[i]t appeared to” him that Tom Watson saw what Chris was doing.
Id.
at 280.

Mr. Goode testified to a further incident, which occurred on January 2, 2015.
Id.
at 282. According to Mr. Goode, one of Respondent's pharmacy technicians brought to his attention “several” prescriptions for schedule II drugs that were “just made up” and which listed Goode as the dispensing pharmacist on the label.
Id.
at 282-83. Mr. Goode testified that Tom Watson was at Respondent that morning and so Mr. Goode laid out six or eight prescriptions and told Watson that while his initials were on the prescriptions he had not filled any of them.
Id.
Tom Watson responded that one of the pharmacy technicians (one who had worked for him for 31 years) “must be doing that.”
Id.
at 283. Goode then told Tom Watson that Chris “was logging in and printing prescriptions from his laptop.”
Id.
Goode further testified that Tom Watson did not take any action in response to the allegation.
13

Id.
at 284.

13
In its closing brief, Respondent argues that in a proceeding brought to revoke Chis Watson's bond, based on the unsuitability of his third-party custodian, a federal magistrate judge found that “Mr. [Grant] Goode lacks credibility when testifying

in court under oath.” Resp. Post-Hrng. Br. 8.;
see also
RX 14 (denying motion, reasoning that “[t]he evidence revealed a number of conflicting family dynamics casting considerable doubt upon the reliability of the witness describing the alleged behavior that the Government presented to disqualify the current third-party custodian”). Apparently, this was in response to Mr. Goode's testimony in the criminal proceeding against Chris Watson that Tom Watson said “he would like to kill a couple of DEA agents,” a statement which he reported to DEA and which prompted the U.S. Attorney to file the motion. Tr. 302;
see also
RX 14.

The CALJ nonetheless found Grant Goode's testimony to be “sufficiently detailed, plausible, and internally consistent to be fully credited in this decision.” R.D. 25. The CALJ further explained that “[b]ecause the Government did not offer the purported threat in its case-in-chief, a disposition of this case does not require that a credibility issue on this statement be rendered, and it forms no basis of this recommended decision.”
Id.
at n.69.

Respondent, however, offered the magistrate judge's findings to attack Grant Goode's credibility with respect to his testimony that he had brought his concerns about Chris Watson to Tom Watson's attention and sought to have the CALJ give Goode's testimony “no weight.” Resp. Post-Hrng. Br. 8 (“It is not known if the attention the DEA gave to Mr. Goode made him have delusions of grandeur that motivated his testimony, but he did take a keen interest in this case when he, unlike other lay witnesses, was at the hearing every day, even after his testimony had been given. On the other hand, unlike his reaction to Mr. Swaim's testimony, Tom Watson flatly denied that Mr. Goode ever brought any concerns about Chris to his attention.” (citations omitted)).

However, while Respondent offered the magistrate judge's finding to impeach Mr. Goode's testimony, I nonetheless adopt the CALJ's credibility finding because in assessing the credibility of Mr. Goode's testimony, I am entitled to consider “the consistency and inherent probability of [his] testimony.”
Universal Camera Corp.
v.
NLRB,
340 U.S. 474, 496 (1951). Here, consistent with Mr. Goode's testimony, other witnesses testified that they brought their concerns with Chris Watson to Tom Watson's attention but that the latter ignored them. Accordingly, I find Goode's testimony credible notwithstanding the magistrate judge's finding.

The Government also elicited testimony from Steve Goode, who, between 2001 and 2012, was a business partner of Tom Watson in four supermarkets (including Respondent), three of which had pharmacies.
Id.
at 485-86. While Steve Goode testified that his responsibilities involved managing the grocery side of the stores and that Tom and Chris Watson oversaw the pharmacies, he would see the daily and weekly sales reports for the stores.
Id.
at 487. Steve Goode further testified that its grocery wholesaler (AWG) allowed McKesson (the drug distributor used by the stores' pharmacies) to invoice through it, and thus, even though Steve Goode's responsibilities were limited to the grocery side of the stores, he could see the pharmacies' purchases on the “weekly AWG statement.”
Id.
at 487-88. According to Steve Goode, the daily sales report showed the sales of both the grocery side and the pharmacies.
Id.

Steve Goode further testified that in the summer of 2010, he noticed that one of the stores (Mayflower Food and Drug) “didn't have any money in [its] accounts.”
Id.
at 490. Goode looked into the situation and determined that while the pharmacy's purchases of medications “were up,” it “sales were flat.”
Id.; see also id.
at 491. Of note, Chris Watson was the Pharmacist in Charge at the Mayflower store.
Id.
at 490.

Steve Goode told Tom Watson about the issue; Watson's response was that “we would get together and . . . have a talk with Chris.”
Id.
at 491. However, when the conversation did occur, Goode was told that he “needed just to take care of the grocery department [and] that Chris would take care of the pharmacy department.”
Id.
at 492-93.

At some point, Chris Watson started working at Respondent.
Id.
at 495. According to Steve Goode, in the “late spring of 2012” he was on vacation when he received a phone call from another employee who told him that Chris Watson had allowed a former employee from the Mayflower pharmacy to go into Respondent on a Sunday afternoon when the pharmacy was closed and fill prescriptions “for her family members and friends.”
Id.
at 496, 498. When Goode returned from vacation, he spoke with Tom Watson about the incident and told him that he needed to “get a handle on Chris.”
Id.
at 496. While Tom Watson said that he would “take care of it,” Goode testified that “[n]othing happened.”
Id.
However, Goode did not know whether the prescriptions were for controlled substances.
Id.
at 500.

Regarding Mr. Swaim's testimony as to the reason he resigned as Respondent's PIC, Tom Watson testified that “I remember some of what he talked about but I don't remember all of what he talked about.” Tr. 326. Watson then added that he had talked to his son “about some things, too, so I was hoping . . . everything was in good shape.”
Id.
Mr. Watson also denied having had a conversation with his long-standing pharmacy technician (as Mr. Swaim testified) that Chris was diverting drugs.
Id.
at 347.

However, Tom Watson later acknowledged that Mr. Swaim is “a good guy,” who had been with him for “a long time,” before attributing the disparity between Mr. Swaim's testimony and his recollection as being the result of “some health problems.”
Id.
at 333. Watson then maintained that “some of the stuff he said I just didn't remember like the conversations that he said we had. That don't mean we didn't have them. It just means that I just don't remember them.”
Id.
at 333-34. As between the testimony of Mr. Swaim and Mr. Watson, the CALJ found Mr. Swaim's testimony more credible than Mr. Watson's.
See
R.D. 23, 41. I agree with the CALJ.

As for Grant Goode's testimony that he told Tom Watson about the issues he found (the missing hard copy prescriptions, the doctors denying having written various prescriptions, the dispensings which were attributed to him which he did not fill), Watson asserted that “I haven't talked to Grant about any concerns,” that Grant “didn't mention a word about anything he talks about here,” and “didn't mention misconduct . . . about anybody.”
Id.
at 348-49.

Watson also faulted Grant Goode for having called the State Board and the DEA, testifying that: “Well, he seems like he's talked to everybody else. He's called the state board. He's called the DEA, and all this stuff, but he hasn't talked to me about it.”
Id.
at 348.
14

Still later, Watson reiterated that Grant Goode had “never come directly to” him about the issues he encountered.
Id.
at 351. While Watson maintained that Grant Goode also had the same medical issue which affected Watson's memory, Tr. 349, the CALJ found that “Watson's assertion that . . . Grant Goode never brought concerns about his son's actions to his attention is simply not credible.” R.D. at 41. I agree with the CALJ.
15

14
Later, Watson testified that:

[F]amily is family. You know, if you've got a problem go see them about it, and talk about the problem. You don't know you got a problem until you at least talk about it. And you know, don't start with the state board, don't start with the DEA and all that. Start by calling your uncle or whatever or tell your mom and have her talk to your uncle if that—you know.

Tr. 350.

15
As for the incidents related by Steve Goode, Tom Watson also denied that Steve Goode had ever complained about the performance of the Mayflower pharmacy when Chris Watson was working there. Tr. 374-75. Notwithstanding that there is an ongoing dispute over the proceeds from dissolution of their partnership,
id.
at 505, the CALJ found that Steve Goode's testimony was fully credible as do I. R.D. 44.

Mr. Watson further testified that he trusted his son, and that this “really” shocked him. Tr. 326. When then asked whether he had any idea that his son “had a substance abuse issue or was diverting,” Watson maintained that he “had no idea [Chris] had any kind of drug problem.”
Id.

When further asked what he would have done if he “had known that [his] son had a substance abuse problem or was diverting controlled substances,” Watson asserted that he would have “[g]ot it stopped,” that he would have gone “to the state board,” and that he

“would have halted that immediately.”
Id.
at 328. However, shortly thereafter, Watson admitted that he did not “know exactly how [he] would have handled it,” but that “at some point” the state board would have had to “become involved” because he had scheduled an inventory for early February and “would have found out” that drugs were missing.
16

Id.
at 330. The CALJ did not find Mr. Watson's testimony on these issues credible. R.D. at 41. Nor do I.

16
While Mr. Watson testified that an inventory would have determined that Respondent was missing drugs, short of doing an audit in which Respondent's receipts of controlled drugs were added to the results of a previous inventory and its dispensings (as well as disposals, thefts or losses) were subtracted, it is not likely that this would have uncovered the problem. In any event, given the evidence that Mr. Swaim and Ms. Gilbert, his longstanding pharmacy technician, (not to mention his former business partner), had told Mr. Watson about his son's activities, I am left to wonder why the inventory was not scheduled months earlier.

Thus, even putting aside the 2010 incident in which his business partner complained about the cash shortage at the Mayflower store, the evidence shows that on multiple occasions, Tom Watson, Respondent's owner, was provided with information that Chris Watson was likely engaged in the diversion of controlled substances. Notably, in his testimony, Tom Watson claimed only that he talked to his son (although it is unclear which incident prompted this) and offered no testimony that he took any other measures (other than to schedule an inventory long after he had received credible reports of a problem) to investigate the allegations. This is especially remarkable in light of the complaints raised by Mr. Swaim and the pharmacy technician, both of whom had worked for Mr. Watson for decades. I therefore hold that Mr. Watson's failure to investigate the allegations that his son and PIC was diverting controlled substances constitutes “other conduct which may threaten public health and safety.” 21 U.S.C. 823(f)(5);
see also Rose Mary Jacinta Lewis,
72 FR 4035, 4042 (2007) (holding physician liable under factor five for failing to investigate the misuse of her registration; “every registrant has a duty to conduct a reasonable investigation upon receiving credible information to suspect a theft or diversion has occurred” as an investigation “is essential to preventing the continuation of criminal activity”).

The record in this matter thus establishes that Chris Watson, Respondent's PIC, committed egregious and extensive misconduct which ranged from regulatory violations to criminal acts. In short, Chris Watson used Respondent's DEA registration as a license to engage in drug dealing. Notably, in its post-hearing brief, Respondent does not dispute the evidence of its PIC's misconduct. Resp. Post-Hrng. Br. 2.

Thus, Respondent acknowledges that “the Government has met its burden of proving its Section 824(a) claim, placing the burden on [Respondent] to show that despite Chris Watson's conduct, granting [it] a [Registration] would not be contrary to the public interest.”
Id.
at 3. I agree and hold that the evidence conclusively establishes that Respondent, through both its PIC and owner, has committed numerous acts “inconsistent with the public interest,” which support both the prior Administrator's issuance of the Immediate Suspension Order, as well as the denial of Respondent's pending application.
17

See
U.S.C. 823(f); 824(a)(4); 824(d).

17
The CALJ found that “[t]he most recent renewal of the Respondent's registration occurred on February 7, 2012, with a scheduled expiration date of March 31, 2015.” R.D. at 2 n.2. The CALJ then explained that “[d]uring a March 19, 2015 status conference, the Respondent, through counsel, represented that a renewal application had been timely filed, and the Government represented that it will not contest the timeliness of the renewal application. Thus, the Respondent's [Registration] remains in full force and effect.”
Id.
(citing 21 CFR 1301.36(i)).

Here, however, the prior Administrator ordered that Respondent's registration be immediately suspended, thus prohibiting Respondent from exercising the authority granted by its registration. Thus, Respondent's registration did not “remain[ ] in full force and effect.”

Moreover, according to the Agency's registration records, of which I take official notice, Respondent did not file its renewal application until March 3, 2015.
See
5 U.S.C. 556(e); 21 CFR 1316.59(e). Significantly, at the time Respondent filed its renewal application, it had previously been served with the Order to Show Cause and Immediate Suspension of Registration. By regulation, DEA has set forth the conditions for the continuation of a registration past its expiration date where a registrant has been served with an Order Show Cause.
See
21 CFR 1301.36(i);
see also
5 U.S.C. 558(c) (“When [a] licensee has made timely and sufficient application for a renewal or a new license in accordance with agency rules, a license with reference to an activity of a continuing nature does not expire until the application has been finally determined by the agency.”). This regulation provides that:

[i]n the event that an applicant for reregistration (who is doing business under a registration previously granted and not revoked or suspended) has applied for reregistration at least 45 days before the date on which the existing registration is due to expire, and the Administrator has issued no order on the application on the date on which the existing registration is due to expire, the existing registration of the applicant shall automatically be extended and continue in effect until the date on which the Administrator so issues his/her order. The Administrator may extend any other existing registration under the circumstances contemplated in this section even though the Applicant failed to apply for reregistration at least 45 days before expiration of the existing registration, with or without request by the Applicant, if the Administrator finds that such extension is not inconsistent with the public health and safety.

Id.

Thus, where a Registrant, which has been served with an Order to Show Cause, fails to file its renewal application at least 45 days before the expiration of its registration, the registration expires absent a showing that the extension of its registration is not inconsistent with the public health and safety.
See Ralph J. Chambers,
79 FR 4962, 4962 (2014). The Agency has also applied the 45 day rule in cases where a registrant has been issued an Immediate Suspension Order, recognizing that while a timely renewal application may result in the extension of a registration, the Immediate Suspension Order precludes the registration from remaining in effect.
See Paul H. Volkman,
73 FR 30630, 30641 (2008). However, the Agency has further held that where an untimely renewal application has been filed and the Registrant's Registration has expired, the application remains pending before the Agency.
Id.

In this matter, I am not bound by the Government's agreement not to contest the timeliness of Respondent's renewal application. Accordingly, I find that Respondent did not file its renewal application until 28 days before its registration expired and was thus untimely. Moreover, I further find that because Respondent's registration was immediately suspended based on the prior Administrator's finding, which is amply supported by the record, that its “continued registration during the pendency of these proceedings would constitute an imminent danger to the public health or safety,” ALJ Ex. 1, at 5; and there is no evidence that the prior Administrator found that the extension of its registration would not be “inconsistent with the public health and safety,” 21 CFR 1301.36(i), its registration has expired. However, I also find that Respondent's application is before the Agency.
See Volkman,
73 FR at 30641.

Notwithstanding its egregious and extensive misconduct, Respondent nonetheless argues that the denial of its renewal application “on this ground is a matter of discretion.” Resp. Post-Hearing Br. 2 (citing
Dinorah Drug Store, Inc.,
61 FR 15972, 15973 (1996)). As a statement of the law, that is true. However, as set forth in numerous decisions, where, as here, “the Government has proved that a registrant [or applicant] has committed acts inconsistent with the public interest, a registrant [or applicant] must ‘present sufficient mitigating evidence to assure the Administrator that it can be entrusted with the responsibility carried by such a registration.’ ”
Medicine Shoppe-Jonesborough,
73 FR 364, 387 (2008) (quoting
Samuel S. Jackson,
72 FR 23848, 23853 (2007) (quoting
Leo R. Miller,
53 FR 21931, 21932 (1988))). “Moreover, because ‘past performance is the best predictor of future performance,’
ALRA Labs, Inc.
v.
DEA,
54 F.3d 450, 452 (7th Cir. 1995), [DEA] has repeatedly held that where a registrant has committed acts inconsistent with the public interest, the registrant must accept responsibility for its actions and demonstrate that it will not engage in future misconduct.”
Medicine Shoppe,
73 FR at 387;
see also Jackson,
72 FR at 23853;
John H. Kennedy,
71 FR 35705, 35709 (2006);

Prince George Daniels,
60 FR 62884, 62887 (1995).
See also Hoxie
v.
DEA,
419 F.3d at 483 (“admitting fault” is “properly consider[ed]” by DEA to be an “important factor[ ]” in the public interest determination). So too, an applicant's candor during the proceeding is an important consideration in the public interest determination.
See Hoxie,
419 F.3d at 483.

While a registrant must accept responsibility and demonstrate that it will not engage in future misconduct in order to establish that its registration is consistent with the public interest, DEA has repeatedly held that these are not the only factors that are relevant in determining the appropriate sanction.
See, e.
g., Joseph Gaudio,
74 FR 10083, 10094 (2009);
Southwood Pharmaceuticals, Inc.,
72 FR 36487, 36504 (2007). Obviously, the egregiousness and extent of a registrant's misconduct are significant factors in determining the appropriate sanction.
See Jacobo Dreszer,
76 FR 19386, 19387-88 (2011) (explaining that a respondent can “argue that even though the Government has made out a
prima facie
case, his conduct was not so egregious as to warrant revocation”);
Volkman,
73 FR at 30644;
see also Paul Weir Battershell,
76 FR 44359, 44369 (2010) (imposing six-month suspension, noting that the evidence was not limited to security and recordkeeping violations found at first inspection and “manifested a disturbing pattern of indifference on the part of [r]espondent to his obligations as a registrant”);
Gregory D. Owens,
74 FR 36751, 36757 n.22 (2009). So too, the Agency can consider the need to deter similar acts, both with respect to the respondent in a particular case and the community of registrants.
See Gaudio,
74 FR at 10095 (quoting
Southwood,
72 FR at 36504).
Cf. McCarthy
v.
SEC,
406 F.3d 179, 188-89 (2d Cir. 2005) (upholding SEC's express adoptions of “deterrence, both specific and general, as a component in analyzing the remedial efficacy of sanctions”).

Having considered the relevant factors, I conclude that Respondent has not produced sufficient evidence to show why it can be entrusted with a new registration. As for whether Respondent accepted responsibility for its misconduct, based on the record as a whole, I agree with the CALJ's finding that it “has not accepted responsibility.” R.D. at 60.

I acknowledge that Respondent stipulated to many of the allegations. However, on the whole, Tom Watson's testimony on the issue was equivocal and unpersuasive as he repeatedly denied that he and Respondent were responsible for his son's misconduct.

For example, Tom Watson initially testified that “I didn't do enough. That was the problem.” Tr. 335. However, Watson then amended his testimony, stating: “Well, not that I didn't do enough, I didn't do it fast enough. I would have found out in a week what was—you know, where we stood on everything, so within a week I would have had to have made a decision on where I went from there because I would have known . . . exactly what we were missing.”
Id.
However, even crediting Watson's testimony that he had scheduled an inventory to be conducted in early February (one week after the ISO was served), the evidence shows that Watson was told of his son's misconduct on multiple occasions by three different persons (Mr. Swaim, Ms. Gilbert, his longstanding pharmacy tech, and his former business partner), well before his nephew Grant Goode also complained. Watson offered no explanation for why he failed to do anything more that talk to his son in response to the earlier reports he received.
18

18
Even then, short of conducting an audit (of which an inventory is only a part), it is unlikely that Tom Watson would have discovered the full scope of Respondent's diversion.

The record contains other examples of Tom Watson providing equivocal testimony or outright denying responsibility for Respondent's various violations of federal law. For example, when asked whether he accepted responsibility for the violations Respondent committed when Chris Watson removed the controlled substance prescriptions from the pharmacy to his house, Tom Watson testified that Chris “failed to provided [sic] with the law,” before adding that while “[t]he owner have [sic] to take some responsibility . . . this is not—that's not my fault, I don't think. I think the pharmacist-in-charge should be responsible for that.” Tr. 354.

When then asked whether he was admitting that Respondent failed to comply with federal law when Chris Watson distributed controlled substance without a prescription, Tom Watson replied: “I don't think [Respondent] did. I think my son did.”
Id.
at 355. Upon further questioning as to whether he was accepting responsibility for these violations, Watson explained: “I accept some responsibility because I probably should have replaced Chris with somebody else, but . . . it's past tense so now so I can't, so I'll have to take responsibility for that, yes.”
Id.

Turning to the multiple instances in which the undercover Agent presented clearly fraudulent prescriptions which Chris Watson filled, Tom Watson testified that he did not accept responsibility.
Id.
at 356. Watson then explained that “[w]hoever filled is responsible for those prescriptions. I didn't fill them.”
Id.

Tom Watson acknowledged that his son violated federal law when he distributed the stock bottles of controlled substances that were found on Eric Horton and Joseph Jackson when they were arrested. Tr. 357. However, when asked whether he bore any responsibility for these acts, Watson testified: “I don't think so.”
Id.
at 358. Continuing, Watson added: “Whoever filled the prescriptions and whoever give [
sic
] the medication away, that's who is responsible, I think. They will have to take responsibility for that they do, I mean it's part of life.”
Id.

Also, as found above, Mr. Watson's nephew testified that Tom Watson was present on one occasion during which Chris Watson placed a 1,000-count bottle of hydrocodone in his back pack and that Tom Watson observed this. Tom Watson did not address this incident either to deny that it had occurred or to acknowledge that it had occurred and accept responsibility for his misconducting in failing to intervene to prevent his son from diverting the drugs.

Still later, when asked whether under Respondent's new Policies and Procedures, Tom Watson could even be affiliated with Respondent, Watson testified that “[i]t would right now, yes. The only problem is I have done nothing wrong.” Tr. 368. Continuing, Watson explained that “[w]hen they come and took my DEA license, yes, that's a possibility, but I have—I mean, I have done nothing wrong. I mean, I can't help what other people have done, but me personally I have done nothing wrong . . . I might be a little slow to act on some things that's all I'm guilty of.” Tr. 368.

Accordingly, I agree with the CALJ's findings that Respondent has failed to accept responsibility for its misconduct. This alone is sufficient to conclude that Respondent has not rebutted the Government's
prima facie
showing that granting Respondent's application “would be inconsistent with the public interest.” 21 U.S.C. 823(f);
see also Liddy's Pharmacy, L.L.C.,
76 FR 48887, 48897 (2011). Given the egregiousness and extent of its misconduct, I need not consider whether Respondent has put forward sufficient evidence of remedial

measures to support its burden of production on this issue.
19

19
On the issue of its remedial measures, Respondent argued that Tom Watson testified that if its application is granted, “he will be more actively involved in its operations” to “ensure its proper operations, accountability, and viability.” Resp. Post-Hrng. Br. 16. However, given the multiple instances in which Mr. Watson was made aware of his son's misconduct and did nothing more than talk to his son, his promise to do better in the future rings hollow.

On this issue, Respondent also presented the testimony of Glenn Wood, its prospective new Pharmacist in Charge. R.D. at 60. Finding Wood's testimony unpersuasive, the CALJ explained that:

Wood's testimony concerning all the extra security measure [sic] he intends to take suffers from the same fundamental defect that [Tom] Watson's representations regarding his anticipated increased pharmacy involvement and implementation of his Proposed Policy do: both men were present and did nothing when the Respondent's PIC Chris [Watson], ran wild. These men are a major part of the problem, not the champions of a solution that can be afforded any genuine credence.

Id.

I do not find adequate support in the record for the CALJ's assertion that Glenn Wood was “present and did nothing when” Chris Watson “ran wild.” While Glenn Wood testified that he had done a one-month internship under Chris Watson while he was in pharmacy school, Tr. 477, 479; and that during the period 2006 through 2007, when he was working at both the Mayflower and Perryville stores, he worked alongside of Chris Watson one day a week,
id.
454, 479; there is no evidence that Chris Watson was diverting controlled substances during this time period, let alone evidence that Glenn Wood observed this.

Thereafter, Wood went to Utah for a brief period before returning to Arkansas and becoming the PIC at Morrilton Food and Drug for approximately three years up until the sale of the pharmacy in 2013. Tr. 395-96. Here again, there is no evidence that Chris Watson was diverting drugs in this period, let alone evidence that Glenn Wood observed this.

After the sale of Morrilton Food and Drug, Wood worked for a pharmacy that is not affiliated with the Watsons, before agreeing in December 2014 with Chris Watson to work several days a week at Respondent.
Id.
at 396. Wood, however, did not start work at Respondent until January 28, 2015, the day after the search warrant and Immediate Suspension Order were served.
Id.
at 398.

To be sure, Wood acknowledged that he had met Eric Horton at a birthday party for Chris Watson's daughter and there were occasions on which Chris Watson and Horton would show up at the pharmacy.
Id.
at 464-68. This, however, is too thin a reed to support the conclusion that Wood was “present and did nothing when [Chris Watson] ran wild,” R.D. at 60, especially given that there is no evidence that Watson was diverting drugs during this period. Ultimately, because Wood testified primarily on the issue of whether Respondent has instituted adequate remedial measures, an issue which I need not resolve given Respondent's failure to accept responsibility, I deem it unnecessary to consider the issues surrounding the February 25, 2015 phone call (nearly one month after the ISO was served and the search warrant executed) between Wood and Grant Goode regarding the latter's employment status, or Wood's involvement in the Redneck Remedy business venture, and decline to adopt that portion of the Recommended Decision which discusses these issues. R.D. 29-36.

Respondent nonetheless argues that it should be granted a new registration because “[t]he community impact” of not granting its application “is significant.” Resp. Post-Hrng. Br. 12. As support for its contention, it relies on
Pettigrew Rexall Drugs,
64 FR 8855, 8860 (1999), a case in which the Agency found that revocation of a pharmacy's registration was justified by the proven misconduct (
i.e.,
dispensing controlled substances without a physician's authorization but for which the patients appeared to have medical needs), but then “recognize[d] that [it was] one of two pharmacies in a relatively poor, medically underserved community, and . . . would most likely close if its DEA registration [was] revoked.” However, the Agency also noted that in addition to having changed its procedures, there was “no evidence of any wrongdoing since the events at issue” which had occurred five or more years before the proceeding was even initiated (and eight years before the issuance of the decision).
Id.

Based on
Pettigrew Rexall Drugs,
Respondent argues that the community impact would be substantial because Respondent “is located in “a rural and underserved area,” and that “[a] large percentage of [its] patients are indigent.” Resp. Post-Hrng. Br. 13-14. Respondent further argues that without a registration, Respondent would not be viable concern because patients will not go to two different pharmacies to fill their prescriptions and that the only “other pharmacy in the area” “would have a monopoly.”
Id.
at 14-15.

While the Agency has now in multiple cases rejected the contention that community impact is a relevant consideration in assessing whether a
prescribing
practitioner's registration “would be consistent with the public interest,” and the reasoning of these decisions calls into question the continuing vitality of
Pettigrew Rexall Drugs
even as applied to a pharmacy, contrary to the discussion in the Recommended Decision, R.D. at 60, the Agency has not formally overruled the case.
20

However, the Agency's reasons for rejecting consideration of community impact evidence in cases involving prescribing practitioners apply with equal force to pharmacies.

20
Each of the cases cited by the ALJ involved prescribers. The closest the Agency has come to overruling
Pettigrew Rexall Drugs
is
Physicians Pharmacy, L.L.C.,
77 FR 47096 (2012). Therein, the Agency agreed “with the ALJ's rejection of the Government's contention that `in assessing the public interest, the nature and amount of diversion of controlled substances in a geographical area is a legitimate area of inquiry and concern when determining whether an applicant should be granted a DEA registration.' ”
Id.
at 47096 n.2. As the Agency explained, “[n]othing in the texts of any of the five [public interest] factors set forth in section 823(f) remotely suggests that Congress granted the Agency authority to deny an application based on its assessment of `the nature and amount of diversion of controlled substances in a geographical area.' ”
Id.
(quoting Gov. Br. 4).

In dicta, the Agency also noted that the Government's argument is “simply the other side of the community impact coin” and “that a rule which takes into account the impact on the community caused by not registering (or de-registering through a revocation proceeding) a particular practitioner is completely unworkable.”
Id.
(citations omitted). Moreover, the Agency cited only cases involving prescribing practitioners and did not discuss
Pettigrew Rexall Drugs.
Accordingly,
Physicians Pharmacy
cannot be read as overruling
Pettigrew Rexall Drugs. See,

e.g., Drug Plastics & Glass Co.,

Inc.,
v.
NLRB,
44 F.3d 1017, 1022 (D.C. Cir. 1995) (“In order to diverge from agency precedent, the Board must `suppl[y] a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored.' ”) (citations omitted);
Shaw's Supermarkets, Inc.,
v.
NLRB,
884 F.2d 34, 37 (1st Cir. 1989) (quoting
Atchison, Topeka & Santa Fe Ry. Co.
v.
Wichita Bd. of Trade,
412 U.S. 800, 808-09 (1973) (plurality op.) (“It is, of course, true that the Board is free to adopt new rules of decision and that the new rules of law can be given retroactive application. Nevertheless the Board may not depart sub silentio, from its usual rules of decision to reach a different, unexplained result in a single case.”)).

In
Gregory Owens,
74 FR 36751, 36757 (2009), the Agency explained that “whether a practitioner treats patients who come from a medically underserved community or who have limited incomes has no bearing on whether he has accepted responsibility and undertaken adequate corrective measures.” The Agency further explained that “[t]he diversion of prescription drugs has become an increasingly serious societal problem, which is particularly significant in poorer communities whether they are located in rural or urban areas,” and that “[t]he residents of this Nation's poorer areas are as deserving of protection from diverters as are the citizens of its wealthier communities.”
Id.

The Agency also noted that there are no workable standards for determining when a practitioner should be entitled to a reduced sanction based on community impact evidence.
Id.
Thus, in
Owens,
the Agency rejected the ALJ's recommendation that the Agency should decline to impose either a suspension or revocation of the practitioner's registration because 10 percent of his patients came from underserved counties and a majority of his patients had limited finances.

As the Agency explained:

The ALJ's reasoning begs the question of how many patients from underserved areas would a practitioner have to treat to claim the benefit of the rule. As for her reliance on the fact that a majority of Respondent's patients have limited incomes, determining what constitutes a patient with a limited income or finances (or what percentage of patients) a practitioner must have [who meet the criteria] to claim entitlement to this rule,

would inject a new level of complexity into already complex proceedings and take the Agency far afield of the purpose of the CSA's registration provisions, which is to prevent diversion.

Id.

Notwithstanding that Respondent provided notice that it intended to argue that the Agency should consider the community impact of denying its application, the Government does not address whether
Pettigrew Rexall Drugs
remains viable as precedent.
See generally
Gov. Post-Hrng. Br. Accordingly, I address whether Respondent has produced sufficient evidence to support such a claim.

Respondent's evidence on the issue was limited to the testimony of Mr. Wood that Perry County is “an extremely rural area” and that “[a] large percent of our customers are what I would describe as being indigent probably somewhat.” Tr. 404. Mr. Wood further testified that without Respondent, there would only be one pharmacy in the county which would have a monopoly.
Id.
at 405. Finally, Mr. Wood testified that in Arkansas, a pharmacist can provide disease state management and give immunizations.
Id.
at 404-05.

Mr. Wood's testimony is too insubstantial to support the conclusion that a sanction less than denial of its application is warranted because of the adverse community impact resulting from its inability to dispense controlled substances. Notably, Mr. Wood did not specify the percentage of Respondent's customers that is indigent, nor the income level he used to support his conclusion.

As for the contention that without a DEA registration, Respondent will lose many of its customers because they will not want to go to two pharmacies to fill their prescriptions, controlled substances constitute only 11 percent of all prescriptions issued nationally.
See
Electronic Prescriptions for Controlled Substances, 75 FR 16236, 16237 (2010) (Interim Final Rule). This suggests that the majority of pharmacy patients do not even fill controlled substance prescriptions.

Moreover, even if the lack of a registration will eventually render Respondent financially unviable, I do not find persuasive its contention that this will have an adverse community impact. While Respondent maintains that this will result in the creation of a monopoly because there is only one other pharmacy in Perryville, Mr. Watson and his partner formerly owned a pharmacy in Morrilton, Arkansas, which is only fourteen miles from Perryville, and the results of a Mapquest search for pharmacies in the Perryville area (of which I take official notice) show that there are six pharmacies located in Morrilton.
21

Tr. 395. Moreover, since
Pettigrew Rexall Drugs,
there has been an increase in the availability of legitimate mail order pharmacies. Thus, I reject Respondent's suggestion that denying its application will allow the remaining pharmacy to engage in monopolistic pricing.

21
Pursuant to 5 U.S.C. 556(e), Respondent may show to the contrary, by filing a properly supported motion, no later than 15 days from the date of service of this order, which shall commence on the date of mailing.

Of further note with respect to Mr. Wood's testimony that a large percentage of Respondent's customers are indigent (and presumably less able to travel to Morrilton), Respondent produced no evidence as to the number of patients it deems to be indigent who are not enrolled in the Arkansas Medicaid program. However, the Arkansas Medicaid program covers the cost of most prescription drugs.
See
Arkansas Dept. of Human Services, Arkansas Medicaid, ARKids First & You—Arkansas Medical Beneficiary Handbook 56 (Rev. 2010). And Respondent produced no evidence that the other Perryville pharmacy does not accept Medicaid patients.
22

Finally, as for Respondent's contention that pharmacists in Arkansas can provide disease state management and immunizations, it has offered no evidence that there is a shortage of medical professionals in the Perryville area who can provide these services.
23

22
Because Respondent seeks to rebut the Government's
prima facie
showing, it has the burden of production on this issue.

23
While I decline to overrule
Pettigrew Rexall Drugs,
I find its reasoning to be problematic as it appears to have given more weight to community impact than was warranted by the minimal evidence discussed in the decision and set forth no principle for when such evidence could overcome other relevant factors.

For example, the decision noted the Agency's agreement with the ALJ's finding that the pharmacy owner “did not appear candid or forthright and his testimony appeared to be tailored to Respondent's defense in this proceeding.” 64 FR at 8858. The decision also noted the “[r]espondent's failure to acknowledge or accept responsibility for any wrongdoing.”
Id.
at 8860.

Notably, since
Pettigrew Rexall Drugs,
the Agency has made clear that where the Government has proved that a registrant/applicant has engaged in intentional or knowing diversion, the registrant/applicant must acknowledge its misconduct to rebut the conclusion that its registration is inconsistent with the public interest.
See Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195,
77 FR 62315, 62323 (2012) (revoking pharmacy registration notwithstanding that company had replaced each pharmacy PIC because company failed to acknowledge its misconduct);
Jayam Krishna-Iyer,
74 FR 459, 463 (2009) (holding on remand that had physician not “acknowledged wrongdoing with respect to both her prescribing to the undercover operatives, as well as” other misconduct, the Agency “would [have] again revoke[d] her registration”);
see also MacKay
v.
DEA,
664 F.3d 808, 820 (10th Cir. 2011) (“The DEA may properly consider whether a physician admits fault in determining if the physician's registration should be revoked.”) (citation omitted);
Chein
v.
DEA,
533 F.3d 828, 837 (D.C. Cir. 2008) (upholding revocation order, noting in part that physician had not “accepted responsibility for his misconduct”);
Hoxie
v.
DEA,
419 F.3d 477, 483 (6th Cir. 2005) (DEA properly considers a registrant's admission of fault in determining whether registration should be revoked).

Since
Pettigrew Rexall Drugs,
the Agency has also made clear that it “places great weight on a registrant's/applicant's candor, both during an investigation and in any subsequent proceeding.”
Robert F. Hunt,
75 FR 49995, 50004 (2010);
see also The Lawsons, Inc., t/a The Medicine Shoppe Pharmacy,
72 FR 74334, 74338 (2007) (quoting
Hoxie,
419 F.3d at 483) (“Candor during DEA investigations properly is considered by the DEA to be an important factor when assessing whether a . . . registration is consistent with the public interest.”);
Rose Mary Jacinta Lewis,
72 FR at 4042 (holding that lying under oath in proceeding to downplay responsibility supports conclusion that physician “cannot be entrusted with a registration”).

Thus, were a case to come before me with similar facts to those of
Pettigrew Rexall Drugs,
I would deny its application and/or revoke its registration.

Thus, I conclude that Respondent's evidentiary showing on community impact is insufficient to rebut the Government's
prima facie
showing that granting its application “would be inconsistent with the public interest.” 21 U.S.C. 823(f). Nor do I consider its evidence sufficient to support a lesser sanction than what is warranted on the facts of this case.

In short, I agree with the CALJ that the misconduct engaged in by both Chris Watson (Respondent's PIC) and Tom Watson (its owner) was egregious.
See
R.D. at 61. And I further agree with the CALJ's conclusion that “a sanction that falls short of [denial] would undermine the Agency's legitimate interests in both specific and general deterrence.”
Id.
Accordingly, I will affirm the Order of Immediate Suspension, as well as order the denial of Respondent's pending application to renew its registration.

Order

Pursuant to the authority vested in me by 21 U.S.C. 823(f) as well as 28 CFR 0.100(b), I order that the application of Perry County Food & Drug for a DEA Certificate of Registration as a retail pharmacy be, and it hereby is, denied. Pursuant to the authority vested in me by 21 U.S.C. 824(a)(4) & (d), as well as 28 CFR 0.100(b), I affirm the Order of Immediate Suspension of DEA Certificate of Registration AP2331851 issued to Perry County Food & Drug. Pursuant to the authority vested in me by 21 U.S.C. 824(f), I further order that all right, title, and interest in any controlled substances seized by the Government during the execution of the

Order of Immediate Suspension issued to Perry County Food & Drug be, and it hereby is, vested in the United States. This Order is effective immediately.
24

24
For the same reasons that led the former Administrator to conclude that an Immediate Suspension was warranted, I conclude that the public interest necessitates that this Order be effective immediately.
See
21 CFR 1316.67.

Dated: October 29, 2015.
Chuck Rosenberg,
Acting Administrator.

Paul A. Dean, Esq.,
for the Government.

M. Darren O'Quinn, Esq.,
for the Respondent.

RECOMMENDED RULINGS, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND DECISION OF THE ADMINISTRATIVE LAW JUDGE

John J. Mulrooney, II, Chief Administrative Law Judge. On January 26, 2015, the Administrator of the Drug Enforcement Administration (DEA) issued an Order to Show Cause and Immediate Suspension of Registration (OSC/ISO)
25

suspending the DEA Certificate of Registration (COR), number AP2331851,
26

of Perry County Food & Drug (Respondent), pursuant to 21 U.S.C. 824(d), on the grounds that the Respondent's continued registration constitutes an immediate danger to the public health and safety. The OSC/ISO also proposes to revoke the Respondent's COR pursuant to 21 U.S.C. 824(a)(4), deny any pending applications for renewal or modification of such registration, or deny any applications for additional DEA registration, on the grounds that the Respondent's continued registration is inconsistent with the public interest as that term is defined in 21 U.S.C. 823(f). On February 6, 2015, the Respondent, through counsel, filed a timely request for a hearing.
27

A hearing was conducted in this matter on March 31-April 1, 2015, in Little Rock, Arkansas.

25
ALJ Ex. 1.

26
Gov't Ex. 1. The Respondent was issued DEA COR AP2331851 prior to April 2, 1986.
Id.
at 1. The most recent renewal of the Respondent's registration occurred on February 7, 2012, with a scheduled expiration date of March 31, 2015.
Id.
During a March 19, 2015 status conference, the Respondent, through counsel, represented that a renewal application had been timely filed, and the Government represented that it will not contest the timeliness of the renewal application. Thus, the Respondent's COR remains in full force and effect. 21 CFR 1301.36(i) (2015).

27
ALJ Ex. 3.

The issue ultimately to be adjudicated by the Administrator, with the assistance of this recommended decision, is whether the record as a whole establishes by substantial evidence that the Respondent's registration with the DEA should be revoked pursuant to 21 U.S.C. 824(a).

After carefully considering the testimony elicited at the hearing, the admitted exhibits, the arguments of counsel, and the record as a whole, I have set forth my recommended findings of fact and conclusions of law below.

The Allegations

In the OSC/ISO, the Government contends that several bases exist upon which the Agency should revoke the Respondent's COR. The Government alleges that revocation of the Respondent's COR is appropriate because the Respondent unlawfully distributed controlled substances in violation of 21 U.S.C. 841(a) and 21 U.S.C. 842(a). Specifically, the Government contends that from August 2014 through January 2015, the Respondent (1) “on several occasions . . . distributed and dispensed controlled substances to individuals either without a prescription, as required by 21 U.S.C. 829(a), (b) and 21 CFR 1306.11(a) and 1306.21(a), or pursuant to prescriptions that [the Respondent's] pharmacist knew or should have known had not been issued for a legitimate medical purpose in the usual course of the practitioner's professional practice” and (2) failed to “provide effective controls against theft and diversion of controlled substances.”
28

28
ALJ Ex. 1 at 1-3.

In support of its allegations, the Government asserts that on several occasions, the Respondent's pharmacist-in-charge (PIC) Chris Watson (Chris W) (1) dispensed controlled substances (hydrocodone and alprazolam) without a prescription and (2) dispensed controlled substances (hydrocodone and alprazolam) pursuant to prescriptions that Chris W knew were fictitious or fraudulent.
29

Additionally, the Government alleges that Chris W advised an undercover DEA agent on how to modify a scrip by hand to “create a more realistic looking prescription” and deliberately ignored the agent's reference to intentional diversion of controlled substances filled at the Respondent.
30

The Government also asserts that state law enforcement discovered the Respondent's stock bottles of controlled substances in vehicles of non-pharmacy personnel, and that the Respondent failed to inform DEA of the loss or theft of controlled substances as required by 21 CFR 1301.74(c).
31

29

Id.
at 1-2.

30

Id.
at 2-3.

31

Id.
at 4.

The Stipulations of Fact

The Government and the Respondent, through counsel, have entered into stipulations
32

regarding the following matters:

32
The parties have also entered into stipulations of credible testimony regarding twenty-three witnesses. All stipulations of fact and testimony are set forth in ALJ Ex. 20.

(1) The Respondent pharmacy is registered with the DEA as a retail pharmacy in Schedules II-V under DEA COR AP2331851 at 112 Houston Avenue, P.O. Box 327, Perryville, Arkansas 72126.

(2) The scheduled expiration date of DEA COR AP2331851, which has been issued to the Respondent, and is the subject of these proceedings, is March 31, 2015.

(3) During the time period of August 15, 2014 through January 28, 2015, Chris W was the Vice-President and Controller of the Respondent pharmacy.

(4) During the time period of August 15, 2014 through January 28, 2015, Chris W was the pharmacist-in-charge (PIC) of the Respondent pharmacy.

(5) The only registered address for the Respondent pharmacy under DEA COR AP2331851 is: 112 Houston Avenue, P.O. Box 327, Perryville, Arkansas 72126.

(6) Patient D.J.
33

had a prescription for Xanax, a controlled substance,
34

filled at the Respondent pharmacy on September 17, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

33
Consistent with the terms of the Protective Order issued in this matter (ALJ Ex. 15), initials have been substituted for patient name identifiers. Copies of each of the prescriptions found at Chris W's house were received into evidence. Gov't Exs. 41, 54-63; Tr. 204.

34
Xanax (alprazolam) is a Schedule IV controlled substance. 21 CFR 1308.14 (2015); Office of Diversion Control,
Benzodiazepines,
Drug Enforcement Admin. (Jan. 2013),
available at http://www.deadiversion.usdoj.gov/drug_chem_info/benzo.pdf.

(7) Patient J.I. had a prescription for Clonazepam, a controlled substance,
35

filled at the Respondent pharmacy on September 17, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

35
Clonazepam is a Schedule IV controlled substance. 21 CFR 1308.14.

(8) Patient A.Q. had a prescription for Hydrocodone, a controlled substance,
36

filled at the Respondent pharmacy on September 17, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

36
Hydrocodone is a Schedule II controlled substance. 21 CFR 1308.12 (2015).

(9) Patient N.R. had a prescription for Hydrocodone, a controlled substance, filled at the Respondent pharmacy on May 25, 2011. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

(10) Patient M.B. had a prescription for Oxycontin, a controlled substance,
37

filled at the Respondent pharmacy on September 17, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

37
Oxycontin (oxycodone) is a Schedule II controlled substance.
Id.;
Office of Diversion Control,
Oxycodone,
Drug Enforcement Admin. (Mar. 2014),
available at http://www.deadiversion.usdoj.gov/drug_chem_info/oxycodone/oxycodone.pdf.

(11) Patient DC had a prescription for Soma, a controlled substance,
38

filled at the Respondent pharmacy on September 16, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

38
Soma (carisoprodol) is a Schedule IV controlled substance. 21 CFR 1308.14; Office of Diversion Control,
Carisoprodol,
Drug Enforcement Admin. (March 2014),
available at http://www.deadiversion.usdoj.gov/drug_chem_info/carisoprodol/carisoprodol.pdf.

(12) Patient D.C. had a prescription for Hydrocodone, a controlled substance, filled at the Respondent pharmacy on September 16, 2013. The hard copy of this prescription was discovered at Chris W's residence during the execution of a federal search warrant on January 27, 2015.

(13) On or about August 15, 2014, Chris W dispensed 42 tablets of hydrocodone 10/325 mg to one A.R. without a prescription.

(14) On November 7, 2014, Chris W dispensed 120 tablets of hydrocodone 10/325 mg and 60 tablets of alprazolam 2 mg to an undercover DEA Special Agent pursuant to a prescription that Chris W knew or should have known was fraudulent.

(15) On November 7, 2014, Chris W instructed an undercover DEA Special Agent to add the letter “R” to the DEA registration number on a prescription, and to change the last digit of the number to seven to create a more realistic-looking prescription.

(16) On November 13, 2014, Chris W instructed an undercover DEA Special Agent to use the letters “RA” instead of “RF” on the DEA registration number of a prescription that was presented to Chris W.

(17) On November 19, 2014, Chris W instructed an undercover DEA Special Agent to change the last digit of a DEA registration number to six on a prescription that was presented to Chris W.

(18) On November 19, 2014, Chris W instructed an undercover DEA Special Agent on how to create a fictitious DEA registration number.

(19) On or about November 19, 2014, Chris W distributed 30 tablets of hydrocodone and 30 tablets of Xanax to Samantha Pemberton without a prescription.

(20) On December 4, 2014, Chris W distributed 240 tablets of hydrocodone 10/325 mg and 60 tablets of alprazolam 2 mg to an undercover DEA Special Agent pursuant to a prescription that Chris W knew or should have known was fraudulent.

(21) The stock bottle of 1,000-count hydrocodone 10/325 mg and two stock bottles of 100-count methadone
39

10 mg that were in Eric Horton's possession at the time of Horton's arrest on or about January 20, 2015 all had the Respondent pharmacy's stock stickers on them.

39
Methadone is a Schedule II controlled substance. 21 CFR 1308.12.

(22) The stock bottle of 500-count alprazolam 2 mg that was in Joe Jackson's possession at the time of Joe Jackson's arrest on or about September 14, 2014 had the Respondent pharmacy's stock sticker on it.

(23) The Respondent pharmacy has not filed a theft or loss report with DEA since at least 2012.

The Evidence

In addition to its reliance on the factual stipulations reached by the parties,
supra,
the Government presented its case through the live and/or stipulated testimony
40

of twenty-six witnesses.
41

40
The parties stipulated to the credibility of the stipulated testimony. ALJ Ex. 20. Where applicable, individual credibility determinations regarding live testimony are set forth in the body of this recommended decision.

41
Two of the Government's witnesses were presented in rebuttal.

Arkansas State Trooper Corporal (Cpl.) Richard Whitley testified that he was on patrol on September 14, 2014 when he was dispatched to a one-vehicle accident where an individual named Joseph Jackson was being detained for leaving the scene. Stipulation of Testimony (SOT) 13(b); Tr. 67-68. Upon his arrival, Cpl. Whitley was advised that another police officer had noticed a bottle of liquid codeine
42

in the front seat of the vehicle. SOT 13(b); Tr. 69-71. Cpl. Whitley started a conversation with Jackson and although Jackson denied any drug use, Cpl. Whitley noticed that his speech was slurred and detected the odor of marijuana. SOT 13(b); Tr. 71. Cpl. Whitley then secured Jackson in handcuffs in a police vehicle, and he and the other officers searched Jackson's car.
43

SOT 13(b). The troopers smelled marijuana in Jackson's car and observed a bottle of codeine on the seat. SOT 13(c). Also discovered during the car search was a black bag containing a baggie of marijuana,
44

prescription bottles of drugs, and two handguns.
Id.
Jackson denied any knowledge of the drugs and told Cpl. Whitley that the weapons were not his. SOT 13(c); Tr. 74. Cpl. Whitley searched Jackson for additional weapons, and discovered three large bundles of cash in his pockets totaling $2,820. SOT 13(c), (d). Among other things, the seized evidence included 74 carisoprodol tablets, 12 alprazolam bars, one bag of suspected marijuana, one bottle of codeine, and two 500-count stock bottles of alprazolam, one of which bore a sticker from the Respondent.
45

SOT 13(d). Interestingly, the materials seized from Jackson's vehicle also contained a handwritten note bearing the following phrases: “no standing out”; “your people go in as a group and if you leave plz [sic] leave your number”; “please have A-C in your car”; “what to say”; “you have lower back pain and you take hydrocodone 10.325 four time [sic] a day”; “xanx [sic] 2 mg twice a day”; “and your last visit to a doctor 2 to 3 months ago.” Gov't Ex. 39 at 3. The seized note bore the obvious hallmarks of crib notes that were apparently contrived to coach others successfully to lie persuasively to obtain controlled substances illegally from DEA practitioner registrants.

42
Codeine is a Schedule II controlled substance. 21 CFR 1308.12.

43
A copy of a photograph of Jackson was received into evidence. Gov't Ex. 38; Tr. 70-71.

44
Marijuana is a Schedule I controlled substance. 21 CFR 1308.11.

45
Photographs of the controlled substances, weapons, and note found in Jackson's car at the time of his arrest were received into evidence. Gov't Ex. 39; Tr. 75-76.

The Government also presented the testimony of Dr. Raymond E. Hambuchen, D.D.S., a dentist practicing in Conway, Arkansas, and an acquaintance of the Respondent's (then) PIC, Chris W. Dr. Hambuchen testified that he has known Chris W for years and that they occasionally exchanged text

messages. SOT 1(a).
46

On September 29, 2014, Dr. Hambuchen exchanged a series of text messages with Chris W wherein Chris W stated that he had dispensed controlled substances to one A.R. using Dr. Hambuchen's name as the prescriber and without a prescription. SOT 1(b); Gov't Ex. 2; Tr. 20-21. Dr. Hambuchen testified that he did not know A.R.,
47

has never issued a prescription for her, and that he wrote a letter to the DEA (Hambuchen Letter), at the request of DEA personnel, on November 12, 2014 memorializing that fact. SOT 1(c); Gov't Ex. 3; Tr. 22-24. The Government acquired and introduced a patient profile on file at the Respondent regarding A.R. that lists Dr. Hambuchen as having authorized eleven prescriptions in her name. Gov't Ex. 4; SOT 20(d), (e); Tr. 185-86. These eleven prescriptions were dispensed at the Respondent between June and December 2014
48

and included the controlled substances Hydroco/APAP and oxycodone. Gov't Ex. 4.

46
Dr. Hambuchen testified that although he and Chris W had “in the past” texted each other a lot because they were friends, it was unusual in the last few years for him to receive a text message from Chris W. Tr. 24-25.

47
The record reflects some confusion regarding A.R.'s first name; however, it is undisputed that Dr. Hambuchen does not know A.R. and did not prescribe any controlled substances to her. Tr. 23; SOT 1(b), (c); 10(d).

48
The patient profile report for A.R. submitted by the Government spans the time period of January 2012 through January 2015. Gov't Ex. 4.

DEA Task Force Officer (TFO) Chad Wilson testified that he is currently stationed at the DEA Little Rock District Office (Little Rock DO) and that he received and reviewed the Hambuchen Letter. SOT 15(b). After reading the letter, TFO Wilson interviewed Dr. Hambuchen, who confirmed its contents,
49

forwarded him a copy, and reiterated that he did not know an A.R.
Id.
TFO Wilson generated a report from the Arkansas prescription monitoring program (PMP) on A.R.
Id.

49
DEA SA Thomas Fisher, another agent stationed at the Little Rock DO, testified that he was also present with TFO Wilson during his interview of Dr. Hambuchen, and corroborated TFO Wilson's account of the interview. SOT 10(c), (d).

DEA Special Agent (SA) Mark Mitchell testified that he is also an agent assigned to the Little Rock DO. SOT 3(a). He testified that on four occasions (specifically, November 7, 2014; November 13, 2014; November 19, 2014; and December 4, 2014), he made undercover visits to the Respondent. SOT 3(b). On each occasion, he presented fictitious controlled substance prescriptions to the pharmacist on duty, Chris W.
50

Id.
On November 7, 2014 (Undercover Visit 1), SA Mitchell met with Chris W and presented him with a fraudulent prescription for hydrocodone and alprazolam. SOT 3(c). According to SA Mitchell, during this visit, Chris W instructed him to add the letter “R” to the DEA registration number on the scrip and to change the last number to a “7” to make the false document appear more realistic.
Id.
In SA Mitchell's estimation, Chris W's tutelage on the subject of making better fraudulent scrips demonstrated that Chris W well knew the presented scrip was fictitious.
Id.
The Government introduced a copy of the fraudulent scrip that SA Mitchell presented to Chris W at the Respondent. Gov't Ex. 6; Tr. 106. The scrip, dated November 7, 2014, is made out for “Brian Jackson” (the name SA Mitchell used in his undercover visits) and specifies 120 tablets of Norco and 60 tablets of Xanax. Gov't Ex. 6. During Undercover Visit 1, SA Mitchell was wearing audio and video recording equipment, but due to an equipment failure,
51

nothing was recorded. SOT 3(c). Chris W filled the fraudulent prescription and dispensed the controlled substances to SA Mitchell.
52

Id.

50
SA Mitchell testified that the patient name he used on all of his undercover visits was “Brian Jackson.” Tr. 154.

51
DEA SA Michael Willett testified that he is assigned to the Little Rock DO. SOT 4(a). SA Willett's area of responsibilities includes technical surveillance issues, and he is familiar with the video equipment that was used in SA Mitchell's undercover visits to the Respondent. SOT 4(b). SA Willett explained that the video equipment utilized during the four undercover visits has an internal battery that needs to be recharged in order for the video recording device to work properly.
Id.
Although none of the audio/video recordings or transcripts made regarding the four undercover visits were the subject of objection by the Respondent, it is worth noting that some of the tapes contained time/date stamp anomalies. The anomalies were persuasively explained by the combined testimony of SA Willett and TFO Wilson. SOTs 4, 15. Regarding date/time discrepancies encountered in the recording of other undercover visits in this case, SA Willett testified that when an internal battery has been allowed to go completely dead, the device loses track of the actual time. SOT 4(b). If the device's battery was not checked prior to use, the recording will reflect whatever time value is stored in the unit.
Id.
In SA Willett's opinion, this is what happened with some of the video recording devices operated by SA Mitchell on some of the undercover visits to the Respondent.
Id.
Additionally, TFO Wilson provided credible corroborating testimony. SOT 15(e)-(g).

52
Photographs of the controlled substances and corresponding receipts received by SA Mitchell during Undercover Visit 1 were received into evidence. Gov't Exs. 7-8; Tr. 129, 131.

On November 13, 2014 (Undercover Visit 2), SA Mitchell attempted to fill another fictitious prescription for hydrocodone and alprazolam at the Respondent.
53

SOT 3(d). SA Mitchell stated that he presented the prescription to Chris W, who informed him that the pharmacy was out of hydrocodone and benzodiazepines, but that he would have more during the first of the following week.
Id.
SA Mitchell recalled that Chris W was mumbling, but that when SA Mitchell asked Chris W if he “did the prescription right,” Chris W recommended that he use the letters “RA” instead of “RF,” which once again, in SA Mitchell's view, demonstrated that Chris W was well aware that the scrip was a fake.
Id.;
Tr. 145-50. When SA Mitchell asked Chris W again which letters to use, Chris W wrote the letters “RA” down on a piece of paper. SOT 3(d). SA Mitchell testified that after he looked at what Chris W wrote, Chris W scratched out the letters with a pen.
Id.

53
Audio and video recordings contemporaneously made by SA Mitchell and a corresponding transcript of Undercover Visit 2 were received into evidence. Gov't Exs. 11-14; Tr. 139-40, 145.

On November 19, 2014 (Undercover Visit 3), SA Mitchell returned to the Respondent and attempted to fill another fictitious prescription for hydrocodone and alprazolam.
54

SOT 3(e). Once again, SA Mitchell encountered Chris W and handed him another fictitious scrip.
Id.
Chris W told Mitchell that he ran out of hydrocodone tablets two days earlier, and that more were not expected until the first of the month, because his supplier had placed limits on how much he could order.
Id.;
Gov't Ex. 18 at 1-2. When SA Mitchell asked Chris W if the fictitious DEA number on the prescription SA Mitchell presented was correct, Chris W instructed him to change the last digit of the DEA number of the prescription to a “6.” SOT 3(e). Chris W started counting, described the methodology in creating a DEA COR number to the undercover agent, and volunteered that the prescription that SA Mitchell just handed him looked better than most he sees as the pharmacy.
55

Id.;
Gov't Ex. 18 at 4. Chris W also volunteered that he believed that multiple law enforcement agencies were scrutinizing his pharmacy, but the record contains no objective indication that he felt particularly inhibited by this revelation. Gov't Ex. 18 at 2. This crash course in the finer points of creating phony scrips reinforced SA Mitchell's view that Chris W was well aware that the scrip he

presented was fraudulent. SOT 3(e). When SA Mitchell asked Chris W for his cell phone number so that he could “call you directly [so that] me and you [could] do business,” Chris W took the undercover agent's cell phone number instead. Gov't Ex. 18 at 3.

54
Audio and video recordings contemporaneously made by SA Mitchell and a corresponding transcript of Undercover Visit 3 were received into evidence. Gov't Exs. 16-18, Tr. 141.

55
Chris W told SA Mitchell that his fraudulent scrip “looks a lot better than any of the other damn things [he's] seen.” Gov't Ex. 18 at 3.

A copy of the fraudulent scrip that SA Mitchell presented to Chris W during Undercover Visit 3 was received into evidence.
56

Gov't Ex. 6, 15; Tr. 110. This scrip, dated November 19, 2014, specified a prescription for 240 tablets of Norco and 60 tablets of Xanax. Gov't Ex. 6. During the course of Undercover Visit 3, SA Mitchell asked Chris W how much it would cost to buy a 1,000-count bottle of hydrocodone. SOT 3(e). Chris W replied, “I don't usually do that.”
Id.
When the undercover agent told Chris W that he was trying to make some extra money, Chris W responded that what the agent does with the pills after the prescription is filled is none of his business.
Id.

56
DI Shelli Chupik, the creator of the fictitious scrip, explained that she deliberately included an authorization for an amount of medication that was inconsistent with the dosage instructions. Tr. 111-13. The discrepancy is highlighted by a text note added by DI Chupik on the copy of the exhibit received (without objection) into evidence.
Id.;
Gov't Ex. 16.

On December 4, 2014 (Undercover Visit 4), SA Mitchell returned to the Respondent, presented another phony scrip to Chris W, and was dispensed 240 tablets of hydrocodone 10/325 mg and 60 tablets of alprazolam 2 mg.
57

SOT 3(f). During Chris W's interaction with SA Mitchell during this visit the two men discussed a possible handgun sale. Over the course of discussion, the undercover agent volunteered to Chris W that he was a “convicted felon.” Gov't Ex. 33 at 8. Chris W told the agent, “I can't sell [a gun] to you because I know you're a convicted felon.”
Id.
Chris W's reservations concerning the undercover agent's felony conviction revelation did not apparently awaken in him any sense of heightened scrutiny regarding the wisdom of dispensing powerful controlled substances to him.

57
Audio and video recordings contemporaneously made by SA Mitchell and a corresponding transcript of Undercover Visit 4 were received into evidence. Gov't Exs. 31-33; Tr. 142-43, 158-59.

Diversion Investigator (DI) Shelli Chupik testified that she is stationed at the Little Rock DO. SOT 2(a); Tr. 107. According to DI Chupik, it was she who created the four fake controlled substances scrips that SA Mitchell used during his undercover visits to the Respondent. Chupik explained that each fake prescription contained the following fictitious information: a doctor's name, the name and phone number of a clinic, and a DEA COR number. SOT 2(b).

On January 12, 2015, the Arkansas Board of Pharmacy (Arkansas Pharmacy Board or APB) supplied DI Chupik with a compact disc (APB CD) that contained reports that APB personnel prepared in connection with the pharmacy. SOT 2(e); Tr. 117-19. Included in the materials provided in the APB CD was a completed DEA Report of Theft or Loss of Controlled Substances (DEA-106), signed by Chris W, as the “Owner/Pharmacist-in-Charge.”
58

SOT 2(e); Gov't Ex. 53. The DEA-106 that was filed with the Arkansas Pharmacy Board on January 9, 2014 reflects (and purports to report to DEA) that on August 5, 2013, the Respondent was burglarized and that there was a theft of controlled substances. Gov't Ex. 53. DI Chupik testified that a DEA-106 is a form that, once prepared, must be filed with DEA.
59

Tr. 120. On January 22, 2015, based on the information contained in the DEA-106, DI Chupik queried the DEA electronic DEA-106 Theft or Loss database and discovered that no DEA-106 forms had been submitted to the DEA by the Respondent in either 2013 or 2014. SOT 2(f); Tr. 120-22. Thus, although the DEA-106 filed by the Respondent with the Arkansas Pharmacy Board ordinarily would/should/does indicate that the document had been filed with DEA to supply DEA with notice of the loss,
60

this was not the case with this purported burglary.

58
A copy of this DEA-106 was received into evidence. Gov't Ex. 53; Tr. 119.

59
Former Respondent PIC Terry Swaim testified that the Respondent had a burglary in August of 2013 that resulted in the theft of approximately two thousand Soma (carisoprodol) pills and some Xanax (alprazolam), and that both Tom Watson and Chris W were aware of the incident. Tr. 259-60.

60
DI Chupik clarified that the duty to file a DEA-106 occurs “pretty much immediately” after discovery of a theft or loss of controlled substances and is not related to the dates when a pharmacy registrant is required to conduct a biennial inventory. Tr. 122-24. Although DI Chupik testified that she believed that the DEA-106 must be filed within seven days (Tr. 124), the DEA regulations actually provide that a “registrant shall notify [the local DEA Field Division Office], in writing, of [a] theft or significant loss of any controlled substances within one business day of discovery of such loss or theft [and] shall also complete, and submit to the Field Division Office in his area, [a DEA-106] regarding the loss or theft.” 21 CFR 1301.76(b) (2015).

Conway Police Officer Matthew Edgmon testified that on November 19, 2014, he initiated a traffic stop with a white Tahoe that had no license plate. SOT 8(b); Tr. 29. After some conversation with the driver, Samantha Pemberton, he ascertained that she had a suspended driver's license and that the (plateless) vehicle she was driving was owned by Chris W, whom she described to Officer Edgmon as the pharmacist/owner of the Respondent as well as her boyfriend.
61

SOT 8(b). Pemberton consented to a search of Chris W's car. A search of her purse yielded numerous pill bottles, many of which were unlabeled.
62

SOT 8(c), (d); Tr. 29-32; Govt. Ex. 19. One of these unlabeled bottles had pills that Officer Edgmon recognized as likely being alprazolam. SOT 8(d). Pemberton's purse also contained bottles with labels bearing her name, as well as other labeled bottles containing non-controlled pills.
Id.
Officer Edgmon subsequently took Pemberton into custody for possession of a controlled substance, advised her of her
Miranda
rights (which Pemberton acknowledged she understood) and then questioned her about the pills he found in her purse. SOT 8(e). Pemberton told Officer Edgmon that she had Xanax and “hydros” (hydrocodone) and claimed that she had prescriptions for these.
Id.
Pemberton was transported to the Conway Police Department (CPD) for processing, and Officer Edgmon secured the contraband.
Id.

61
The Government introduced a copy of an insurance claim letter issued to “Jennifer Watson and Christopher Watson” on November 4, 2014, stating that on October 28, 2014, Pemberton was involved in a loss with a vehicle (a “2013 Infinity”) on their policy. Gov't Ex. 27; Tr. 214-18. Additionally, Pemberton told Investigator Kennedy in the course of the interview at CPD that Chris W was her boyfriend and her pharmacist. Tr. 38.

62
Photographs of the controlled substances found in Pemberton's car at the time of her November 19, 2014 arrest were received into evidence. Gov't Ex. 19; Tr. 31-32.

In addition to corroborating many of the details of her arrest, Samantha Pemberton testified that she was Chris W's girlfriend, and that it is her understanding that he is an owner of the Respondent pharmacy. SOT 7(a). According to Pemberton, prior to the traffic stop, Chris W had given her controlled substances (specifically, 30 hydrocodone 10/325 mg and 30 Xanax 2 mg) in unmarked bottles and without a prescription, and at the time of her arrest, those medications were still in her possession. SOT 7(b).

CPD narcotics investigator Thomas Kennedy testified that he interviewed Pemberton at CPD after her arrest on November 19 and that this interview was recorded.
63

SOT 9(b); Tr. 33. During the interview, Pemberton stated that: (1) she received at least some of the controlled substances that were in her purse from Chris W; (2) she had prescriptions for the controlled

substances in unmarked bottles, and that she had received those controlled substances from the Respondent where her boyfriend, Chris W, was the pharmacist; (3) she had just filled prescriptions for hydrocodone and Xanax at the Respondent, and that she received the controlled substances from Chris W in unmarked bottles; and (4) she was prescribed 30 hydrocodone 10/325 mg and 30 Xanax 2 mg, but was not able to name the doctor who prescribed the pills. SOT 9(c); Gov't Ex. 26 at 6-7.

63
A recording and corresponding transcript of the interview of Pemberton conducted by Investigator Kennedy on November 19, 2014 were received into evidence. Gov't Exs. 25-26; Tr. 36, 38.

Investigator Kennedy telephoned Chris W during the afternoon of the day Pemberton was apprehended and recorded that conversation.
64

SOT 9(d). When Investigator Kennedy informed Chris W that Pemberton had been arrested, Chris W replied that he only vaguely knew her. Specifically, Chris W said “I think I know who she is,” and amorphously described her as “blonde” and “kinda cute.” SOT 9(e). Chris W told Investigator Kennedy that he thought he recalled that Pemberton may have come into the Respondent that morning, and he admitted that on or about November 19 he allowed her to “borrow” some hydrocodone and Xanax without a prescription, and that the pharmacy had “loaned” her some pills.
Id.
During the call, Chris W allowed that “we let her borrow a few because she was out,” and “I know we loaned her some hydrocodone and seemed like Xanax, maybe 2 mg.”
Id.
When Investigator Kennedy asked Chris W how much he had dispensed to Pemberton, he responded, “I want to say like 30 of each” “just because she gets like 90 at a time.”
Id.
Chris W assured Investigator Kennedy that the pharmacy was “just waiting on [the doctor's office] to call back because that office is notoriously slow.”
Id.

64
A recording and corresponding transcript of Investigator Kennedy's November 19, 2014 phone call with Chris W were received into evidence. Gov't Exs. 20-21; Tr. 41, 43.

Investigator Kennedy made repeated requests to Chris W and Pemberton to provide scrips for the 30 hydrocodone pills and 30 Xanax pills that Chris W admitted he had dispensed to Pemberton on or about November 19, but neither supplied any documentation. SOT 9(f). Chris W also provided Investigator Kennedy with conflicting information about the identity of Pemberton's prescribing physician. SOT 9(g). Initially, Chris W told him that the prescribing physician was a Dr. Humbard and agreed to fax a copy of the prescription.
Id.

On November 20, the day following the arrest and phone call, Investigator Kennedy did receive a fax (Fax 1) from the Respondent, but contrary to Chris W's representations on the phone, Fax 1 contained no scrips, but only a copy of two prescription labels (
i.e.,
pharmacy fill stickers) from the Respondent.
65

Id.;
Tr. 52-53. Further, not only did Fax 1 contain labels instead of scrips, but in Investigator Kennedy's review of those prescription labels, he determined that the labels did not even correspond to the information Chris W had provided him during their phone conversation about the controlled substances he said he had dispensed to Pemberton the previous day. SOT 9(g). Instead, the labels with Fax 1 reflected prescriptions that had been filled on October 9, 2014 (not November 19, 2014), and had been issued for 75 alprazolam 2 mg tablets and 75 Hydroco/APAP tablets 10/325 mg (not 30 tablets of each drug as Chris W had stated during the previous day's phone call).
Id.
Moreover, the labels stated that the prescriptions had been issued by a “Dr. Arnold”, not a “Dr. Humbard.”
Id.
Furthermore, an examination of the labels that were provided indicated that both directed that no refills remained on the prescriptions.
Id.
Thus, even on their face, the prescriptions supplied by Chris W in Fax 1 that were purportedly used for the October 9, 2014 dispensing to Pemberton were no longer valid for refilling anything on November 19, 2014 and could not have been properly used for that purpose.
Id.

65
A copy of Fax 1 was received into evidence. Gov't Ex. 48; Tr. 54.

On November 21, three days following Pemberton's arrest, Investigator Kennedy contacted Pemberton and notified her that he had not received scrips for the drugs she received on November 19 from the Respondent.
66

SOT 9(h). In response, Pemberton told Kennedy that she believed that Chris W had sent them.
Id.
When Investigator Kennedy explained that he had not received the scrips, Pemberton assured him that she would take care of it.
Id.
Pemberton called Investigator Kennedy back later in the day and told him that Chris W would fax the scrips.
Id.
Sometime later in the day, following his phone call with Pemberton, Investigator Kennedy telephoned Chris W at the Respondent and recorded the call.
67

SOT 9(i). Chris W insisted that he had faxed over the labels the other day, but Investigator Kennedy again explained that he still needed to see the scrip.
Id.;
Tr. 55-56. Chris W then clarified that he did not give the scrip to Pemberton because she did not want her to try to take it somewhere else, but that he would have one of his technicians look up the scrip and send it over. SOT 9(i).

66
A recording and corresponding transcript of Investigator Kennedy's phone call with Pemberton were received into evidence. Gov't Exs. 66-67; Tr. 47-50.

67
A recording and corresponding transcript of Investigator Kennedy's phone call with Chris W were received into evidence. Gov't Exs. 22-23; Tr. 44-46.

Later in the day, Investigator Kennedy did receive another fax (Fax 2) from the Respondent but once again, the fax had was not a scrip, but merely a page of lined paper covered in scribbles, which, based on the investigator's experience, appeared to him to be a page from a notepad customarily used for call-in type prescriptions.
68

SOT 9(j); Tr. 55, 58-59. The Fax 2 notepad page did not contain any reference to a prescription issued to dispense medication to Pemberton on November 19. SOT 9(j). Instead, the only reference to Pemberton on the notepad page appeared in the upper right-hand corner of the fax, which included a handwritten date that appeared to be either “10-4-14” or “10-9-14”; beneath that date appeared to be the name “Samantha Pemberton,” the text “Xanax 2mg, TID, #75”, “Narco 10/325”, some additional writing that Investigator Kennedy was unable to decipher, and then “#75”.
Id.
The name “James Arnold” is written at the bottom of the notation. Gov't Ex. 49. Investigator Kennedy was quite clear that he had plainly articulated that he needed to see the scrips. Tr. 57-58.

68
A copy of Fax 2 was received into evidence. Gov't Ex. 49; Tr. 59-60.

Investigator Kennedy testified that on January 2, 2015, he called Pemberton again to remind her that he had still not received a scrip. SOT 9(k). In response, she stated that she would try to get the prescription and deliver it to him.
Id.
Four days later, on January 6, 2015, Pemberton brought Investigator Kennedy two scrips, both of which bore the date October 9, 2014, and a signature from a Dr. James Arnold.
69

Id.;
Tr. 61-63. The Government also introduced a copy of Pemberton's patient profile from the Respondent, which indicates that two prescriptions (alprazolam and hydroco/APAP) were dispensed to Pemberton on October 9, 2014. Gov't Ex. 24. According to the patient profile, James Arnold, M.D. is listed as the prescriber for both prescriptions.
Id.

69
Copies of these scrips were received into evidence. Gov't Exs. 51, 52; Tr. 64-66.

In her testimony, Pemberton indicates that on January 6, 2015, approximately two months after her arrest, she did give Investigator Kennedy scrips that corresponded to the controlled

substances in her possession on the day she was arrested. SOT 7(d). The scrips Pemberton gave Investigator Kennedy were dated October 9, 2014 and were issued for 75 tablets of hydrocodone 10/325 mg and 75 tablets of alprazolam 2 mg, and bore the purported signature of Dr. James Arnold of the Baptist Emergency Medicine Clinic.
Id.

Dr. James Arnold, M.D., testified that he is a doctor practicing at the Baptist Springhill Clinic in North Little Rock, Arkansas. SOT 22(a). He stated that by virtue of the fact that he practices in an emergency room, he does not prescribe more than twenty hydrocodone tablets at one time. SOT 22(b). Dr. Arnold also indicated that he has checked his records and determined that he has not treated and does not know a person named Samantha Pemberton.
70

SOT 22(c). On January 7, 2015, Investigator Kennedy turned over to TFO Wilson the two scrips bearing Dr. Arnold's name that Samantha Pemberton had given him. SOT 15(c). Both prescriptions had stickers on them indicating that they were filled on October 9, 2014, and both were marked “no refills.”
Id.

70
TFO Wilson ascertained from Dr. Arnold that he is not Pemberton's doctor and did not issue the scrips. SOT 15(d).

DEA Task Force Officer (TFO) Robert Puckett testified that he is a member of the Beebe, Arkansas Police Department, is cross-designated as a DEA TFO, and is currently stationed at the Little Rock DO. SOT 5(a); Tr. 91. TFO Puckett reviewed surveillance videos of the interior and exterior of the Respondent that were recorded on January 20, 2015, and testified that he isolated screen captures from the video. SOT 5(c); Gov't Ex. 36. Chris W and his friend, Eric Horton, are depicted in the video footage. The Government introduced the screen captures of the surveillance videos created by TFO Puckett, as well as TFO Puckett's written narrative describing the actions of Horton and Chris W. Tr. 98; Gov't Ex. 36.
71

71
A clearer version of this exhibit was subsequently substituted in the record with the assent of the Respondent. Tr. 387-88.

According to TFO Puckett's (unchallenged) account, the surveillance tapes show Chris W handing Horton a bottle of medication, some of the contents of which Horton pours into an amber prescription bottle. Gov't Ex. 36 at 1-2. Horton can then be seen placing items into a blue tote bag on the floor. Horton then pulls a stock bottle of medication from the shelf, shows the bottle to Chris W, puts it into a pharmacy bag, and drops the pharmacy bag with some other items into a blue tote bag.
Id.
at 2. Horton takes another stock medication bottle from a pharmacy shelf, the bottle disappears from view, and Horton can be seen shoving something into his jacket pocket and walking out of the pharmacy.
Id.
at 2-6. A camera outside the pharmacy picks up Horton throwing something into a dumpster and placing the aforementioned blue tote
72

into a white pickup truck.
Id.
at 10.

72
A blue tote filled with controlled medications was seized from the white pickup truck Horton was driving at the time of his arrest later that evening. Tr. 83.

Upon Horton's return to the pharmacy, Chris W can be seen placing a stock medication bottle on the counter for Horton to count out into multiple amber prescription bottles, one of which he hands to Chris W, and one of which he places in his own pocket.
Id.
at 7-13. Horton then fills a pharmacy bag with the amber prescription bottles and again leaves the pharmacy.
Id.
at 13. A camera outside the pharmacy captures Horton pulling away from the pharmacy in the white pickup truck.
Id.
at 11. Other photographs depict controlled substances that were in the blue tote upon its subsequent seizure and inventory.
Id.
at 11-13.

Shortly after Horton departed the Respondent, he was pulled over by Arkansas State Trooper First Class (Trooper) Kevin Growns. Trooper Growns testified that when he observed Horton's white truck change lanes twice without the benefit of a turn signal,
73

he initiated a traffic stop. SOT 11(b); Tr. 77-78. At the time of the stop, Horton handed the trooper Chris W's driver's license, eventually explaining that he had the license so he could use Chris W's credit card. SOT 11(b); Tr. 78-79. Horton ultimately did present his own driver's license,
74

a run of which through the Arkansas Crime Information Center (ACIC) database
75

revealed two outstanding warrants, one of which was active. SOT 11(c). In response to a question from Trooper Growns, Horton indicated that he was not armed, but that there were two pistols in the truck he was driving.
Id.;
Tr. 81. Horton was searched for weapons, handcuffed, and placed into the trooper's vehicle.
76

SOT 11(c). Trooper Growns found two handguns sitting on the rear floorboard (one of which had a chambered round). Tr. 83. When asked if there was anything else illegal in his vehicle, Horton gave no response, but an inventory search of the truck revealed a blue tote bag that contained a stock bottle of hydrocodone
77

and two 100-count methadone 10 mg stock bottles.
78

SOT 11(d); Tr. 83-84. Horton also had $1,529 in cash on his person, and the methadone stock bottles seized had the Respondent's pharmacy stickers on them. SOT 11(d), (e). Additionally, Trooper Growns testified:

73
Trooper Growns testified that a traffic citation was issued regarding the failure to signal violation as well as driving without insurance. Tr. 85.

74
Tr. 79-80.

75
In his live testimony, Trooper Growns stated that the license check was initiated through the Federal Bureau of Investigation's National Crime Information Center (NCIC) database. Tr. 79. The variance is not material.

76
A copy of Horton's arrest photograph was received into evidence. Gov't Ex. 34; Tr. 86-87.

77
In Trooper Growns's estimation, it was a “like [a] thousand count bottle of hydrocodone[ ] . . .” Tr. 83.

78
Photographs of the controlled substances found in Horton's vehicle were received into evidence. G

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2015-28723. Public record. Not legal advice.