[Federal Register Volume 70, Number 89 (Tuesday, May 10, 2005)]
[Notices]
[Pages 24626-24627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-9282]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Net Wholesale; Revocation of Registration

    On September 16, 2004, the Deputy Assistant Administrator, Office 
of Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Net Wholesale (Net) proposing to revoke its DEA 
Certificate of Registration 002918NOY as a distributor of List I 
chemicals pursuant to 21 U.S.C. 824(a)(4), on the ground that Net's 
continued registration would be inconsistent with the public interest, 
as that term is used in 21 U.S.C. 823(h). The order also notified Net 
that should no request for a hearing be filed within 30 days, its 
hearing right would be deemed waived.
    According to the DEA investigative file, the Order to Show Cause 
was sent by certified mail to Net at its registered location at 3415 
9th Avenue, Huntsville, Alabama 35805. That correspondence was returned 
to DEA as ``Unclaimed,'' indicating the addressee had twice failed to 
respond to postal service notices to pick up the letter. On November 4, 
2004, the Order to Show Cause was re-mailed to Net at its registered 
address by regular first class mail. That correspondence has not been 
returned to DEA and is presumed to have been received. DEA has not 
received a request for a hearing or any other reply from Net or anyone 
purporting to represent the company in this matter.
    Therefore, the Deputy Administrator of DEA, finding that (1) thirty 
days have passed since delivery of the Order to Show Cause, and (2) no 
request for a hearing having been received, concludes that Net has 
waived its hearing right. See Aqui Enterprises, 67 FR 12,576 (2002). 
After considering relevant material from the investigative file, the 
Deputy Administrator now enters her final order without a hearing 
pursuant to 21 CFR 1309.53(c) and (d) and 1316.67. The Deputy 
Administrator finds as follows.
    List I chemicals are those that may be used in the manufacture of a 
controlled substance in violation of the Controlled Substances Act. 21 
U.S.C. 802(34); 21 CFR 1310.02(a). Pseudoephedrine and ephedrine are 
List I chemicals commonly used to illegally manufacture 
methamphetamine, a Schedule II controlled substance. 
Phenhylpropanolamine, also a List I chemical, is presently a 
legitimately manufactured and distributed product used to provide 
relief of the symptoms

[[Page 24627]]

resulting from irritation of the sinus, nasal and upper respiratory 
tract tissues, and is also used for weight control. Phenylpropanolamine 
is also a precursor chemical used in the illicit manufacture of 
methamphetamine and amphetamine.
    As noted in previous DEA final orders, methamphetamine is an 
extremely potent central nervous system stimulant and its abuse is a 
persistent and growing problem in the United States. See e.g., Direct 
Wholesale, 69 FR 11,654 (2004); Branex, Inc., 69 FR 8,682 (2004); Yemen 
Wholesale Tobacco and Candy Supply, Inc., 67 FR 9,997 (2002); Denver 
Wholesale, 67 FR 99,986 (2002).
    The Deputy Administrator's review of the investigative file reveals 
that on May 6, 1998, Net was initially granted DEA registration to 
distribute ephedrine, pseudoephedrine and phyenylpropanolamine List I 
chemical products. The company's registered location was 3415 9th 
Avenue, Huntsville, Alabama 35805 and its registration was last renewed 
on October 29, 2002. On October 17, 2003, prior to expiration of the 
current registration, the company's owner, Mr. Valiollah Geholamkhas, 
submitted an application for renewal. On October 20, 2003, he filed an 
application for modification of Net's registered location to 7000 North 
Parkway, Huntsville, Alabama 35810.
    At the time of initial DEA registration, Net held a permit issued 
by the Alabama Board of Pharmacy (Alabama Board) as a distributor of 
List I chemicals. Despite a state requirement to maintain the permit, 
Net did not apply for renewal and its permit lapsed on December 31, 
2001. Nevertheless, the company continued to operate and distribute 
List I chemicals within Alabama for approximately two more years.
    On Net's current application for renewal of DEA registration, by 
checking ``N/A'' and failing to list a state license/permit number in 
response to Question 1(a), Mr. Geholamkhas represented that Alabama did 
not require a state license to distribute listed chemicals. This was a 
material falsification of an application in violation of 21 U.S.C. 
843(a)(4)(A).
    On January 22, 2004, when DEA Diversion Investigators conducted an 
inspection of Net's proposed new location at 7000 North Parkway, they 
discovered the company was already conducting business there, without 
notifying DEA and obtaining approval for the new and separate location, 
as required by 21 CFR 1309.23. A record review revealed that over a 
seven month period, during which Net lacked an Alabama permit and DEA 
authorization to conduct business at its new location, Net purchased 
over 45 million milligrams of combination ephedrine tablets. In 
subsequent correspondence with the Alabama Board, Mr. Geholamkhas 
admitted the company had distributed List I chemicals from its new 
location, without DEA approval.
    In May 2004, the Alabama Board, issued its Order finding Net had 
sold and delivered List I chemical products during a period when it did 
not hold a current Alabama distributor permit. The Alabama Board 
imposed a $1000.00 fine and granted Net's application for a new state 
permit, but placed it on probationary status for three years.
    Pursuant to 21 U.S.C. 824(a)(4) and 823(h), the Deputy 
Administrator may revoke a DEA Certificate of Registration and deny any 
pending applications for renewal of such registration if she determines 
that granting the registration would be inconsistent with the public 
interest. Section 823(h) requires the following factors be considered 
in determining the public interest:
    (1) Maintenance of effective controls against diversion of listed 
chemicals into other than legitimate channels;
    (2) Compliance with applicable Federal, State and local law;
    (3) Any prior conviction record under Federal or State laws 
relating to controlled substances or to chemicals controlled under 
Federal or State law;
    (4) Any past experience of the applicant in the manufacture and 
distribution of chemicals; and
    (5) Such other factors as are relevant to and consistent with the 
public health and safety.
    As with the public interest analysis for practitioners and 
pharmacies pursuant to subsection (f) of section 823, these factors are 
considered in the disjunctive; the Deputy Administrator may on any one 
or a combination of factors and may give each factor the weight she 
deems appropriate in determining whether a registration should be 
revoked or an application for registration denied. See, e.g., Energy 
Outlet, 64 FR 14,269 (1999); Henry J. Schwartz, Jr., M.D., 54 FR 16422 
(1989).
    The Deputy Administrator finds factors two and five relevant to 
Net's continued registration and its aplication for renewal.
    As to factor two, compliance with Federal, State and local law, the 
record shows that for a two year period, Net distributed List I 
chemicals without a state permit that is required to engage in that 
activity. Further, for a period of at least seven months the company 
also violated Federal law and regulations by distributing List I 
chemicals from an unregistered location.
    With regard to factor five, other factors relevant to and 
consistent with the public health and safety, the Deputy Adminstrator 
finds that in his application for renewal, Mr. Geholamkhas 
intentionally misrepresented the status of his authority to distribute 
List I chemicals under State law, when he falsely indicated that no 
state license or registration was required for his company to 
distribute those products in Alabama. This lack of candor, taken 
together with the registrant's disregard of law and regulations 
discussed above, makes questionable Net and its owner's commitment to 
the statutory and regulatory requirements designed to protect the 
public from diversion of listed chemicals. See e.g., Seaside 
Pharmaceutical Co., 67 FR 35,459 (2001).
    Finally, the Deputy Administrator also finds factor five relevant 
to the company's request to continue distributing phenylpropanolamine 
and the apparent lack of safety associated with the use of that 
product. DEA has previously determined that an applicant's request to 
distribute phenylpropanolamine constitutes a ground under factor five 
for denial of an application for registration. See e.g., John E. McRae 
d/b/a J & H Wholesale, 69 FR 51,480 (2004); Direct Wholesale, 69 FR 
11,654 (2004); ANM Wholesale, 69 FR 11,652 (2004); Shani Distributors, 
68 FR 62,324 (2003).
    Accordingly, the Deputy Administration of the Drug Enforcement 
Administration, pursuant to the authority vested in her by 21 U.S.C. 
823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that DEA 
Certificate of Registration 002918NOY, previously issued to Net 
Wholesale, be, and it hereby is, revoked. The Deputy Administrator 
further orders that the pending applications for renewal and 
modification of the aforementioned registration be, and they hereby 
are, denied. This order is effective June 9, 2005.

    Dated: May 2, 2005.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. 05-9282 Filed 5-9-05; 8:45 am]
BILLING CODE 4410-09-M