An Orange County chemical supply company linked to more than 100 illegal drug labs in Southern California, Arizona and Nevada has pleaded guilty to felony charges, and a judge authorized the sale of its assets to pay a $100,000 fine, federal prosecutors said Tuesday.
ChemLab Supplies Inc. in Placentia, through its attorney, pleaded guilty Monday to knowingly distributing chemicals and glassware for manufacturing methamphetamine. Its three owners have agreed to plea bargains that admit their roles in illegally supplying the products, prosecutors said.
ChemLab was a major supplier of illicit chemicals and equipment to small and large methamphetamine labs for more than a decade, and its bust is a major blow to meth producers across Southern California, federal and state authorities said.
Indeed, they said, after ChemLab was raided last August, state narcotics officials reported a 60% decline in the number of methamphetamine labs found in the county.
"We can take down labs all day long all over the place, but it makes a major impact when we take down a place like this," said Walt Allen, who heads the Orange County branch of the state Bureau of Narcotics Enforcement.
"This outfit was just a known shopping center for people who wanted to manufacture methamphetamines," he said.
Prosecutors on Tuesday filed plea bargains in which the company's three owners each agree to plead guilty to one drug felony charge.
David Vander Hakes, 44, of Corona, is expected to be sentenced later to a 15-month term, said Assistant U.S. Atty. Gail J. Standish. Matthew William Insley, 41, of Huntington Beach, who ran ChemLab's Hawthorne store, is expected to get 10 months in custody. There was no stipulated sentence for Kevin Scott Miller, 36, of Anaheim. Hakes and Insley each own 40% of the company, and Miller owns the rest.
Authorities said the three-year probe was triggered after investigators noticed that the company's drugs kept surfacing at meth labs raided by police. The company admitted that more than a quarter of its 1999 revenue--an amount exceeding $400,000--resulted from the illegal sale of chemicals and supplies. In the first six months last year, more than 40% of its revenue came from illegal sales.
ChemLab is among several businesses that have come under federal scrutiny recently for suspicious sales of so-called precursor substances used to manufacture methamphetamine, said U.S. attorney spokesman Thom Mrozek in Los Angeles.
"These are people who sell products that have legitimate uses: Freon, iodine, [the decongestant] pseudoephedrine," Mrozek said. "By selling large quantities of these substances, they just make it easy for [drug manufacturers] to circumvent the law."
Southern California has long been known as a hotbed for manufacturers of methamphetamine. Although the Inland Empire is considered to be the center of the illicit trade, hundreds of labs have been found throughout the region, Mrozek said.
Federal, state and local officials, working in a task force, have been helped by a 1998 law that requires merchants to log detailed information, including driver and vehicle license numbers, on all buyers of products needed for meth manufacturing.
Last year, an Anza pharmacist was arrested on charges of illicit sales of pseudoephedrine. In 1999, the owner of a Torrance plastics company, arrested with 17 others, was charged with aiding and abetting the manufacture of methamphetamine for supplying large amounts of Freon to meth manufacturers.
Three women at a Lancaster feed store are awaiting trial on charges they failed to record sales of iodine crystals properly. The store had been selling crystals for 40 years to treat horses' ailing hoofs.
Authorities said ChemLab sold drug manufacturers red phosphorus, iodine and specialized glassware--all key components in manufacturing methamphetamine, the stimulant also known as speed, crank and crystal meth.
In their plea agreements, the owners acknowledged coaching employees on how to conduct sales of the substances and fill out paperwork to make any illegal sales look legitimate.
Federal authorities, tipped to the case by Brea police, arranged for electronic surveillance that helped show the company knew the sales were illicit, Standish said.
"They were one of the rogue companies that skates around the law," she said.
"They didn't sell 20 pounds of red phosphorus out the side door in the middle of the night. This was a harder case--a case of them turning a blind eye."