Drug Distribution Company, 2 Executives Plead Guilty

A major U.S. distributor of pseudoephedrine--a chemical that can be used to make illicit methamphetamine--has pleaded guilty to federal drug charges in Los Angeles, prosecutors said Tuesday.

Spectrum International Inc. of Billings, Mont., will pay $2 million in fines and penalties under the terms of a plea agreement negotiated with prosecutors.

Charles Gene Eisele, 43, the company’s president, and his brother, Richard Dean Eisele, 42, vice president, also pleaded guilty Monday. They face up to four years in prison and fines of $250,000.

The company and the two brothers were charged with distributing a chemical while having reason to believe it would be used to make a controlled substance. Pseudoephedrine is popularly used in over-the-counter medications to relieve symptoms of the common cold and hay fever.

The U.S. attorney’s office said pseudoephedrine distributed by Spectrum was found in 35 methamphetamine labs across the nation.

From June 1996 to January 1998, prosecutors said, the company sold about 1.1 billion pseudoephedrine tablets, mostly to companies and individuals in California, the center of illegal methamphetamine production in the nation.

“We’re fairly confident that most of those pills wound up in the wrong hands,” said Assistant U.S. Atty. R. Michael Bullotta, co-prosecutor in the case.

Bullotta said Spectrum’s actions were particularly egregious because it continued to sell large quantities of pseudoephedrine to one customer after receiving a subpoena indicating that the client was under investigation.

“They had every reason to know better,” Bullotta said.

Defense attorney Donald Re, who represented Charles Eisele, disagreed. He denied that the brothers knew the shipments were destined for meth labs.

“If the DEA had come to them and said explicitly that some customer was diverting their pseudoephedrine for illegal use, they would have dropped that customer, but they were never told,” he said. “As the plea agreement makes clear, this is not a case where the defendants had actual knowledge of a crime. It only says they should have known.”

Re said the Eiseles are no longer distributing pharmaceutical drugs.

The case against them was an outgrowth of a four-year investigation by the Drug Enforcement Administration and the Internal Revenue Service. To date, 34 people have been charged with crimes, 27 of whom have been convicted. The others are either awaiting trial or being sought.

The federal government has tried for years to choke off the supply of chemicals to meth lab operators. In 1988, authorities began regulating bulk sales of ephedrine and pseudoephedrine because they were being used as precursors in the production of methamphetamine. Under pressure from pharmaceutical companies, however, an exemption was created for over-the-counter products containing those chemicals.

According to the DEA, meth labs wasted no time and began acquiring ephedrine and pseudoephedrine from rogue pharmaceutical distributors. In 1993, Congress plugged the loophole for ephedrine, but pseudoephedrine remained largely unregulated.