Document ID: FDA-2019-N-3310-0002
Agency: fda
Document Type: Notice
Title: Matthew Dailey: Final Debarment Order
Posted Date: 2020-03-17T04:00Z

[Federal Register Volume 85, Number 52 (Tuesday, March 17, 2020)]
[Notices]
[Pages 15193-15194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05450]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2019-N-3310]

Matthew Dailey: Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is issuing an order 
under the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring 
Matthew Dailey for a period of 10 years from importing or offering for 
import any drug into the United States. FDA bases this order on a 
finding that Mr. Dailey was convicted, as defined in the FD&C Act, of 
one felony count under Federal law for introducing misbranded drugs 
into interstate commerce and one felony count of importing merchandise 
contrary to law. The factual basis supporting both felony convictions, 
as described below, is conduct relating to the importation into the 
United States of a drug or controlled substance. Mr. Dailey was given 
notice of the proposed debarment and was given an opportunity to 
request a hearing within the timeframe prescribed by regulation to show 
why he should not be debarred. As of November 8, 2019 (30 days after 
receipt of the notice), Mr. Dailey had not responded. Mr. Dailey's 
failure to respond and request a hearing constitutes a waiver of his 
right to a hearing concerning this matter.

DATES: This order is applicable March 17, 2020.

ADDRESSES: Submit applications for termination of debarment to the 
Dockets Management Staff, Food and Drug Administration, 5630 Fishers 
Lane, Room 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Jaime Espinosa (ELEM-4029), Division 
of Enforcement, Office of Strategic Planning and Operational Policy, 
Office of Regulatory Affairs, Food and Drug Administration, 12420 
Parklawn Dr., Rockville, MD 20857, 240-402-8743 or at 
debarments@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 306(b)(1)(D) of the FD&C Act (21 U.S.C. 335a(b)(1)(D)) 
permits debarment of an individual from importing or offering for 
import any drug into the United States if the FDA finds, as required by 
section 306(b)(3)(C) of the FD&C Act, that the individual has been 
convicted of a felony for conduct relating to the importation into the 
United States of any drug or controlled substance.
    On May 8, 2019, Mr. Dailey was convicted as defined in section 
306(l)(1) of the FD&C Act, in the U.S. District Court for the Eastern 
District of Michigan, when the court accepted his plea of guilty and 
entered judgment against him for the offenses of introducing misbranded 
drugs into interstate commerce in violation of section 301(a) of the 
FD&C Act (21 U.S.C. 331(a)) and importing merchandise contrary to law 
in violation of 18 U.S.C. 545.
    The FDA's finding that debarment is appropriate is based on the 
felony convictions referenced herein. The factual basis for these 
convictions is as follows: As contained in the Stipulation of Facts 
incorporated into the Plea Agreement, filed on January 8, 2019, from on 
or about March 2011 through November 2016, Mr. Dailey imported hundreds 
of shipments of kratom into the United States. To evade the lawful 
regulatory authority of FDA, he instructed his foreign suppliers to 
label shipments of bulk kratom with materially false statements that 
described the kratom as ``incense,'' ``paint pigment,'' and other 
substances not regulated by the FDA. Mr. Dailey also provided the FDA 
(sometimes through import brokers) materially false written 
descriptions of his bulk kratom imports. After receiving the kratom, 
Mr. Dailey then apportioned bulk shipments of kratom into smaller 
portions and repackaged the kratom into smaller plastic bags at a 
location not registered as a facility that manufactures, prepares, 
propagates, compounds, and processes drugs. Mr. Dailey then sold kratom 
products to hundreds of consumers through the United States through a 
website he managed. The labeling of his kratom products did not include 
any directions for use, such as indications, dosage instructions, 
methods of administration, or contraindications. In selling his kratom 
product, Mr. Dailey intended that consumers use his kratom products as 
a ``drug'' within the meaning of section 201(g)(1) of the FD&C Act (21 
U.S.C. 321(g)(1)). Specifically, Mr. Dailey intended that consumers use 
the kratom he imported to treat and mitigate diseases, including but 
not limited to chronic pain, fibromyalgia, opiate withdrawal, and Lyme 
disease, and to affect the structure and function of the human body by 
taking the kratom products as substitutes for drugs of abuse and 
prescription pills. As stated in the Stipulation of Facts, Mr. Dailey's 
actions were in violation of section 301(a) of the FD&C Act and 18 
U.S.C. 545.
    As a result of this conviction, FDA sent Mr. Dailey by certified 
mail on October 2, 2019, a notice proposing to debar him for 2 
consecutive 5-year periods (10 years) from importing or offering for 
import any drug into the United States. The proposal was based on a 
finding under section 306(b)(3)(C)

[[Page 15194]]

of the FD&C Act that Mr. Dailey's felony convictions for introducing 
misbranded drugs into interstate commerce and importing merchandise 
contrary to law were for conduct relating to the importation into the 
United States of any drug or controlled substance because he illegally 
imported kratom, a misbranded drug, for repackaging, sale, and 
distribution to U.S. consumers. In proposing a debarment period, FDA 
weighed the considerations set forth in section 306(c)(3) of the FD&C 
Act that it considered applicable to Mr. Dailey's offenses, and 
concluded that each of these felony offenses independently warranted a 
5-year period of debarment, and proposed that these debarment periods 
be served consecutively under section 306(c)(2)(A)(iii) of the FD&C 
Act.
    The proposal informed Mr. Dailey of the proposed debarment and 
offered Mr. Dailey an opportunity to request a hearing, providing him 
30 days from the date of receipt of the letter in which to file the 
request, and advised him that failure to request a hearing constituted 
a waiver of the opportunity for a hearing and of any contentions 
concerning this action. Mr. Dailey received the proposal and notice of 
opportunity for a hearing on October 7, 2019. Mr. Dailey failed to 
request a hearing within the timeframe prescribed by regulation and 
has, therefore, waived his opportunity for a hearing and waived any 
contentions concerning his debarment (21 CFR part 12).

II. Findings and Order

    Therefore, the Assistant Commissioner, Office of Human and Animal 
Food Operations, under section 306(b)(3)(C) of the FD&C Act, under 
authority delegated to the Assistant Commissioner, finds that Mr. 
Dailey has been convicted of two felony counts under Federal law for 
conduct relating to the importation into the United States of any drug 
or controlled substance. FDA finds that each offense should be accorded 
a debarment period of 5 years. Under section 306(c)(2)(A)(iii) of the 
FD&C Act, in the case of a person debarred for multiple offenses, FDA 
shall determine whether the periods of debarment shall run concurrently 
or consecutively. FDA has concluded that the 5-year period of debarment 
for each of the 2 offenses of conviction needs to be served 
consecutively, resulting in a total debarment period of 10 years.
    As a result of the foregoing finding, Mr. Dailey is debarred for a 
period of 10 years from importing or offering for import any drug into 
the United States, effective (see DATES). Pursuant to section 301(cc) 
of the FD&C Act, the importing or offering for import into the United 
States of any drug or controlled substance by, with the assistance of, 
or at the direction of Mr. Dailey is a prohibited act.
    Any application by Mr. Dailey for termination of debarment under 
section 306(d)(1) of the FD&C Act should be identified with Docket No. 
FDA-2019-N-3310 and sent to the Dockets Management Staff (see 
ADDRESSES). All such submissions are to be filed in four copies. The 
public availability of information in these submissions is governed by 
21 CFR 10.20(j).
    Publicly available submissions will be placed in the docket and 
will be viewable at http://www.regulations.gov or at the Dockets 
Management Staff (see ADDRESSES) between 9 a.m. and 4 p.m., Monday 
through Friday.

    Dated: March 11, 2020.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2020-05450 Filed 3-16-20; 8:45 am]
 BILLING CODE 4164-01-P