Santa Clara Company To Pay Penalty And Boost DEA Compliance Program To Resolve Alleged Controlled Substances Act Violations

SAN FRANCISCO - Santa Clara-based Lin-Zhi International, Inc. (LZI) has agreed to pay a total of $180,835 to the United States and implement an enhanced Drug Enforcement Administration (DEA) compliance program to resolve allegations that LZI, a DEA-registered manufacturer of controlled substances, violated the Controlled Substances Act (CSA) in connection with its manufacturing and distribution of certain controlled substances.

LZI is registered with the DEA to manufacture controlled substances as bulk reagents for drug abuse testing. To the extent registrants like LZI seek to distribute these drug testing kits to facilities not registered with the DEA, the CSA requires them to apply to the DEA for an exemption letter, which DEA then evaluates to determine whether the registrant may receive an exemption.

The United States alleges that LZI failed to obtain exemption letters for the sale of certain chemical preparations or mixtures containing controlled substances listed in any schedule in violation of the Act, as well as certain other violations of the Act, between April 1, 2021, and December 5, 2023.

Under the settlement agreement, LZI will pay $180,835 to the United States. LZI will also maintain an enhanced DEA compliance plan for three years, under which it will (1) hire and retain a DEA Compliance Analyst or other employee of equivalent specialty to implement its enhanced compliance program and advise LZI regarding its DEA compliance obligations and related policies, procedures, and practices, and (2) engage an independent third party with experience in DEA compliance matters to conduct at least one audit annually of LZI's DEA compliance program, policies, procedures, and practices.

"Entities that fail to comply with the requirements of their DEA registration can expect heightened investigative scrutiny and significant civil penalties," said United States Attorney Craig H. Missakian. "This Office remains committed to working with the DEA to ensure that registrants who do not comply with the Controlled Substances Act are held accountable."

"DEA is committed to upholding our regulatory line of defense," said Bob P. Beris, Special Agent in Charge of the Drug Enforcement Administration, San Francisco Field Division. "When companies fail to secure required exempt chemical letters, they create dangerous vulnerabilities in the supply chain and compromise public health and safety."

Assistant U.S. Attorney Savith Iyengar handled this matter for the government. The investigation and settlement resulted from a coordinated effort by the U.S. Attorney's Office for the Northern District of California and DEA Diversion Investigators in San Francisco.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.