Hi-Tech Pharmaceutcals, Inc.; Denial of Applications, 16715-16717 [E8-6377]

Download as PDF sroberts on PROD1PC70 with NOTICES Federal Register / Vol. 73, No. 61 / Friday, March 28, 2008 / Notices and a Certificate of Registration is issued by the Administrator to such person.’’ 21 CFR 1309.31(a). In 1996, Congress enacted the Comprehensive Methamphetamine Control Act of 1996, which, for the first time, subjected distributors of pseudoephedrine, phenylpropanolamine, and combination ephedrine products to the registration requirements. See 62 FR 52254 (1997) (final rule). To prevent disruption of the legitimate commerce in these products, DEA enacted a temporary exemption from registration for distributors of these products. See 62 FR at 5915 (interim rule). Accordingly, with respect to distributors of combination ephedrine products, the exemption applies to ‘‘each person required’’ to be registered, ‘‘provided that the person submit[ted] a proper application for registration on or before July 12, 1997.’’ 21 CFR 1309.25(a). The regulation further provides that ‘‘[t]he exemption will remain in effect for each person who has made such application until the Administration has approved or denied that application.’’ Id. DEA applied the same rule to distributors of pseudoephedrine and phenylpropanolamine, the only difference being that the application had to be submitted ‘‘on or before October 3, 1997.’’ Id. 1309.25(b).6 As found above, on July 29, 1997, Mr. Neil S. Abodabba applied for a registration to distribute ephedrine, pseudoephedrine, and phenylpropanolamine. GX 1. While Mr. Abodabba listed Memphis Wholesale Company as the applicant, the firm did not file its charter of incorporation with the Tennessee Secretary of State until April 14, 1998. GX 36, at 4; GX 30. As Memphis Wholesale did not exist as an independent legal entity until more than eight months later, the application submitted on July 29, 1997, is personal to Mr. Abodabba. Moreover, there is no evidence that Memphis Wholesale Company, Incorporated, has ever submitted an application for a DEA registration either under its original owner (Mr. Abodabba), or under its new owner (Mr. Issa). Likewise, there is no evidence that the application was amended to reflect that Memphis Wholesale Company, Inc., was the applicant. While the evidence indicates that Mr. Issa disclosed to agency investigators during the 2002 inspection that he was 6 DEA regulations defined ‘‘[t]he term person [as] includ[ing] any individual, corporation, government or governmental subdivision or agency, business trust, partnership, association, or other legal entity.’’ 21 CFR 1300.01(b)(34). VerDate Aug<31>2005 17:57 Mar 27, 2008 Jkt 214001 Respondent’s owner, the firm did not have authority to distribute under the temporary exemption because it was not the ‘‘person’’ who applied for registration in July 1997. See, e.g., 21 CFR 1309.25(a). As the regulation makes plain: [e]ach person required by [21 U.S.C. 822] to obtain a registration to distribute * * * a combination ephedrine product is temporarily exempted from the registration requirement, provided that the person submits a proper application for registration on or before July 12, 1997.’’ Id. (emphasis added).7 Moreover, the authority Mr. Abodabba obtained to distribute (which was limited to pseudoephedrine and phenylpropanolamine) was not lawfully transferred to either the corporation or to its new owners) because the written consent of the Agency was never obtained. See id. 1309.63 (‘‘No registration or any authority conferred thereby shall be assigned or otherwise transferred except upon such conditions as the Administrator may specifically designate and then only pursuant to his written consent.’’). Accordingly, I hold that Respondent has been without authority to distribute list I chemicals since July 16, 2001 (when Mr. Issa became its owner), and that all distributions it has made since that date (including all those listed in the compilation of its 2004 sales) have been in violation of federal law.8 See 21 U.S.C. 822(a). I further hold that Respondent does not have an application pending before the agency. Order Pursuant to the authority vested in me under 5 U.S.C. 554(e) and 28 CFR 0.100(b) & 0.104, I hereby declare that since July 16, 2001, Memphis Wholesale 7 While Respondent relies on Mr. Abodabba’s application, it ignores that under 21 CFR 1309.25(a), this application was not timely submitted with respect to combination ephedrine products and thus, not even Mr. Abodabba was not entitled to the exemption. See GX 1 (application dated July 29, 1997). 8 Mr. Abodabba is not a party to this proceeding, and I conclude that it is not necessary to decide whether Respondent’s activities under his ownership were lawful. Moreover, to the extent this proceeding was brought to deny Mr. Abodabba’s application, which is the only application in the record, see GX 1, service has not been properly effectuated. See Jones v. Flowers, 547 U.S. 220, 230 (2006) (‘‘[T]he government’s knowledge that notice pursuant to the normal procedure was ineffective triggered an obligation on the government’s part to take additional steps to effect notice.’’); see also id. at 232 (discussing Robinson v. Hanrahan, 409 U.S. 38, 39–40 (1972) (per curiam) (even though state law required vehicle owner to register his address with the state, ‘‘we found that the State had not provided constitutionally sufficient notice, despite having followed its reasonably calculated scheme, because it knew that [the owner] could not be reached at his address of record’’). PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 16715 Company, Incorporated, has not had authority under 21 CFR 1309.25 to distribute pseudoephedrine, combination ephedrine, and phenylpropanolamine. This Order is effective immediately. Dated: March 17, 2008. Michele M. Leonhart, Deputy Administrator. [FR Doc. E8–6378 Filed 3–27–08; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Drug Enforcement Administration Hi-Tech Pharmaceutcals, Inc.; Denial of Applications On August 16, 2007, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, issued an Order to Show Cause to Hi-Tech Pharmaceuticals, Inc. (Respondent), of Norcross, Georgia. The Show Cause Order proposed the denial of Respondent’s pending applications for DEA Certificates of Registration to import and manufacture ephedrine, a list I chemical, on the ground that its ‘‘registrations would be inconsistent with the public interest.’’ Show Cause Order at 1 (citing 21 U.S.C. 824(a)(4) & 958(c)). The Show Cause Order specifically alleged that both Respondent’s owner, Mr. Jared Wheat, and its Vice-President, Mr. Stephen D. Smith, had previously been convicted of controlled-substance felony offenses. Id. The Show Cause Order next alleged that on February 23, 2006, agents of the U.S. Customs Service and the Food Drug Administration (FDA) executed a search warrant at Respondent and seized various products containing ephedrine alkaloids that the company was manufacturing and distributing, as well as the raw materials used to manufacture these products. Id. at 2. The Show Cause Order further alleged that Respondent operated several websites which represented that they offered controlled substances for sale from Canada and that the ‘‘drugs were made using good manufacturing practices in Canada,’’ when, in fact, ‘‘HiTech manufactured many of these drugs, including various Schedule III and IV controlled substances, in the country of Belize and unlawfully imported them into the United States without a DEA registration’’ in violation of 21 U.S.C. 957(a) and 21 CFR 1301.11. Id. at 2. Relatedly, the Show Cause Order alleged that on September 7, 2006, a federal grand jury indicted E:\FR\FM\28MRN1.SGM 28MRN1 16716 Federal Register / Vol. 73, No. 61 / Friday, March 28, 2008 / Notices Respondent, Mr. Wheat, Mr. Smith, and ten other individuals associated with the company, charging them with, inter alia, ‘‘the unlawful distribution of controlled substances and conspiracy to import controlled substances into the United States.’’ Id. On August 20, 2007, the Show Cause Order was served on Respondent by certified mail, return receipt requested. Thereafter, Respondent’s counsel submitted a letter in which it waived its right to a hearing, but in which it also responded to several of the Show Cause Order’s allegations. Ltr. of Joseph P. Schilleci, Jr., to Hearing Clerk, 1 (Sept. 14, 2007). The factual assertions and arguments presented in this letter will be considered pursuant to 21 CFR 1301.43(c). I therefore conclude that Respondent has waived its right to a hearing. I therefore enter this Final Order without a hearing based on relevant material contained in the investigative file as well as Respondent’s letter and make the following findings. See 21 CFR 1301.43(e). sroberts on PROD1PC70 with NOTICES Findings On July 25, 2005, Respondent, a Georgia corporation, applied for two DEA registrations: one to import ephedrine and one to manufacture it. Ephedrine is a list I chemical, which is frequently diverted into the illicit manufacture of methamphetamine, a schedule II controlled substance. See 21 U.S.C. 802(34); see also 21 CFR 1308.12(d). Respondent’s applications were submitted by Mr. Jared R. Wheat. On both applications, Respondent stated that ‘‘Jared R. Wheat, [its] President and sole shareholder * * * was convicted on October 2, 1991[,] in the United States District Court, Northern District of Alabama * * * for conspiracy to distribute MDMA. He was sentenced to the custody of the Bureau of Prisons for thirty-six months (36) months [and] three years supervised release.’’ 1 During the course of DEA’s preregistration investigation, agency investigators received information that several other federal agencies including the FDA and Federal Trade Commission were also investigating Respondent. Moreover, during an on-site inspection, Mr. Wheat told DEA investigators that he was currently importing ephedra or Ma Huang Extract. He also provided DEA investigators with a ‘‘Certificate of 1 The investigative file also indicates that in September 1992, Mr. Smith was convicted in the Georgia Superior Court of purchasing or possession of a controlled substance. As the letter from Respondent’s counsel indicated, Mr. Smith ‘‘is a Vice-President of [Respondent but] does not own any shares in’’ the company. VerDate Aug<31>2005 17:57 Mar 27, 2008 Jkt 214001 Analysis’’ which indicated that Respondent had imported from Sinochem Jiangsu Import & Export Corporation of Nanjaing, China, one thousand kilograms of Ma Huang Extract containing 8.2% total ephedrine alkaloids.2 The Certificate stated that ‘‘[t]his product is concentrated from natural sources and does not contain either synthetic or fermentation source. All alkaloids are results from extraction and concentration of crude plant material.’’ The Certificate also noted that ‘‘water’’ was used as the ‘‘extract solvent.’’ On February 23, 2006, investigators from FDA and U.S. Customs executed a search warrant at Respondent’s building. The FDA investigators seized various products. Simultaneously, the United States Attorney filed a complaint for forfeiture against various products which the FDA had seized on the ground that they were adulterated. These products were labeled as ‘‘Lipodrene,’’ ‘‘Stimerex-ES,’’ and ‘‘Betradene,’’ and each of the products indicated that they contained 25 mg. of ephedrine alkaloids in each tablet. Subsequently, the U.S. District Court for Northern District of Georgia rejected Respondent’s contentions and granted the Government’s motion for summary judgment on its complaint for forfeiture. Hi-Tech Pharmaceuticals, Inc. v. Crawford, 505 F.Supp.2d 1341 (N.D. Ga. 2007).3 On September 7, 2006, a federal grand jury returned a forty-five count indictment against Respondent, Jared Wheat, Stephen D. Smith, and nine other individuals. The indictment alleged, inter alia, that the defendants had conspired to manufacture in Belize and intentionally import, or attempt to import, into the United States, schedule III controlled substances (the steroids oxandrolone, oxymetholone, stanazolol) and schedule IV controlled substances (alprazolam, diazepam, lorazepam, phentermine, and zolpidem), in violation of 21 U.S.C. 952(a)(2), 960(a)(1), 960(b)(4), and 963. United States v. Wheat, et al., No. 1:06CR382 (N.D. Ga.) (Indictment at 14–16, 23–24). The indictment also alleged that 2 During the inspection, Mr. Wheat provided the DIs with a product list and invoice which showed that it was manufacturing and distributing several products which contained ephedrine alkaloids. Each of the products had an ephedrine alkaloid content of less than five percent. 3 Regarding the seizure of ephedrine alkaloid products from Respondent, its counsel admitted that ‘‘on August 15, 2007, the United States District Court for the Northern District of Georgia entered judgment in favor of the FDA.’’ Ltr. of Joseph P. Schilleci, Jr., to Hearing Clerk, at 1 (Sept. 14, 2007). Respondent’s counsel further stated that it was appealing the district court’s decision. Id. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 Respondent, Mr. Wheat, Mr. Smith, and others, knowingly and intentionally imported phentermine, Xanax (alprazolam), and Ambien (zolpidem) on various dates between February and May 2004. Indictment at 30–31. Regarding the indictment, Respondent’s counsel stated that it ‘‘is confident that the facts will show that it has been and is appropriately conducting its business within the bounds of the law.’’ Letter of Respondent’s Counsel, at 1. Respondent’s counsel further contended that the indictment’s allegations ‘‘are incorrect and do not portray an accurate description of [it], either in the past or present,’’ and ‘‘that there is no basis for the Government’s indictment of HiTech.’’ Id. The investigative file establishes, however, that several of the defendants named in the indictment have entered guilty pleas to various counts. As part of his plea agreement, B.W. admitted that he conspired with Wheat, Smith, and Respondent, ‘‘to knowingly and intentionally import and attempt to import into the United States from Belize [the] Schedule IV controlled substances * * * [a]lprazolam, [d]iazepam, [l]orazapam, [p]hentermine, and [z]olpidem * * * all in violation of federal law.’’ B.W. Guilty Plea and Plea Agreement at 1–2. B.W. further admitted that he ‘‘had knowledge of attempts to import Schedule IV controlled substances and [that he] assisted in the manufacture of [these substances] on two (2) occasions.’’ Id. at 2. Defendant D.W. admitted that he conspired with Wheat and Smith ‘‘to knowingly and intentionally import and attempt to import into the United States from Belize anabolic steroids, Schedule III controlled substances, and to knowingly and intentionally import and attempt to import into the United States from Belize [the] Schedule IV controlled substances * * * [a]lprazolam, [d]iazepam, [l]orazepam, [p]hentermine and [z]olpidem * * * all in violation of federal law.’’ D.W. Guilty Plea and Plea Agreement at 1. Finally, Defendant D.J. admitted in his plea agreement that he had knowledge that Wheat, Smith, Respondent, and others, ‘‘did knowingly and intentionally * * * conspire * * * with each other and others to knowingly and intentionally import and attempt to import into the United States from Belize [the] Schedule IV controlled substances * * * [a]lprazolam, [d]iazepam, [l]orazepam, [p]hentermine and [z]olpidem * * * in violation of’’ federal law. D.J. Guilty Plea and Plea Agreement at 1–2. E:\FR\FM\28MRN1.SGM 28MRN1 16717 Federal Register / Vol. 73, No. 61 / Friday, March 28, 2008 / Notices Discussion Section 303(h) of the Controlled Substances Act (CSA) provides that ‘‘[t]he Attorney General shall register an applicant to distribute a list I chemical unless the Attorney General determines that registration of the applicant is inconsistent with the public interest.’’ 21 U.S.C. 823(h). In making this determination, Congress directed that I consider the following factors: (1) Maintenance by the applicant of effective controls against diversion of listed chemicals into other than legitimate channels; (2) Compliance by the applicant with applicable Federal, State, and local law; (3) Any prior conviction record of the applicant 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. sroberts on PROD1PC70 with NOTICES Id. ‘‘These factors are considered in the disjunctive.’’ Joy’s Ideas, 70 FR 33195, 33197 (2005). I may rely on any one or a combination of factors, and may give each factor the weight I deem appropriate in determining whether an application for a registration should be denied. See, e.g., David M. Starr, 71 FR 39367, 39368 (2006); Energy Outlet, 64 FR 14269 (1999). Moreover, I am ‘‘not required to make findings as to all of the factors.’’ Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); Morall v. DEA, 412 F.3d 165, 173–74 (D.C. Cir. 2005). Having considered all of the factors, I conclude that factors two and four establish that Respondent’s registration would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h). Respondent’s application will therefore be denied. Here, the record establishes that between September 2005 and February 2006, Respondent illegally imported into the United States, 1,000 kilograms of Ma Huang extract, which contained ephedrine alkaloids in a concentration of approximately eight percent. While at the time of the importation, ‘‘harvested plant material * * * contain[ing] ephedrine * * * that preserve[d] the natural constituents in the ratios that are found in the plant’s natural state’’ was exempt from the CSA’s requirements, DEA’s regulation further provided that ‘‘[p]lant material subjected to chemical or physical extraction, concentration, chemical reaction, or other treatment that alters the plant’s natural constituents [was] not exempt.’’ 21 CFR VerDate Aug<31>2005 17:57 Mar 27, 2008 Jkt 214001 1310.12(d)(1).4 Respondent did not have a registration to import the product, which contains a list I chemical and was produced through an extraction process, and thus was not exempt from the application of the Act. See 21 U.S.C. 957(a); 21 CFR 1310.12(d)(1). Respondent’s importation of Ma Huang extract therefore violated federal law. Moreover, substantial evidence establishes that Respondent, its owner (Mr. Wheat), and vice-president (Mr. Smith), violated the CSA by importing schedule III and IV controlled substances (including anabolic steroids, multiple benzodiazepines, as well as phentermine and zolpidem) into the United States from Belize in violation of 21 U.S.C. 952 and 957(a)(b). While the indictment sets forth only allegations, the plea agreements of several coconspirators implicated Respondent, Mr. Wheat, and Mr. Smith, in the conspiracy to knowingly import controlled substances into the United States in violation of federal law. The agreements thus provide substantial evidence to support a finding that Respondent, Mr. Wheat, and Mr. Smith violated federal law.5 See Richardson v. Perales, 402 U.S. 389 (1971) (upholding use of hearsay evidence in administrative proceedings). Accordingly, I conclude that granting Respondent’s application would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. § 823(h). Order Pursuant to the authority vested in me by 21 U.S.C. 823(h), as well as 28 CFR 0.100(b) & 0.104, I order that the application of Hi-Tech Pharmaceuticals, Inc., for a DEA Certificate of Registration to import ephedrine, a list I chemical, be, and it hereby is, denied. I further order that the application of HiPharmaceuticals, Inc., for a DEA Certificate of Registration to 4 On July 25, 2007, DEA published an interim rule which removed the exemption ‘‘for unaltered ephedra plant material.’’ 72 FR 40738, 40741 (2007). This rule became effective on August 24, 2007. Id. at 40742. 5 In light of the evidence establishing that Mr. Wheat and Mr. Smith have committed offenses in violation of the CSA, I need not decide whether their prior convictions are too dated to be considered. I further note that Respondent imported listed chemicals which it then used to manufacture and distribute products which a federal court has held were adulterated within the meaning of the Food, Drug, and Cosmetic Act. See Hi-Tech Pharmaceuticals, Inc., v. Crawford, 505 F.Supp.2d at 1357. See also 21 U.S.C. 823(h)(5) (directing consideration of ‘‘such other factors as are relevant to and consistent with the public health and safety’’). This conduct also supports the conclusion that granting Respondent a registration would be ‘‘inconsistent with the public interest.’’ 21 U.S.C. 823(h). PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 manufacture ephedrine, a list I chemical, be, and it hereby is, denied. This order is effective April 28, 2008. Dated: March 17, 2008. Michele M. Leonhart, Deputy Administrator. [FR Doc. E8–6377 Filed 3–27–08; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Drug Enforcement Administration Importer of Controlled Substances; Notice of Application Pursuant to Title 21 Code of Federal Regulations 1301.34(a), this is notice that on November 29, 2007, Mallinckrodt Inc., 3600 North Second Street, St. Louis, Missouri 63147, made application by renewal to the Drug Enforcement Administration (DEA) for registration as an importer of the basic classes of controlled substances listed in schedule II: Drug Phenylacetone (8501) .................. Coca Leaves (9040) ..................... Opium, raw (9600) ....................... Poppy Straw (9650) ..................... Poppy Straw Concentrate (9670) Schedule II II II II II The company plans to import the listed controlled substances for the manufacture of controlled substances in bulk for distribution to its customers. No comments, objections, or requests for any hearings will be accepted on any application for registration or reregistration to import crude opium, poppy straw, concentrate of poppy straw or coca leaves. As explained in the Correction to Notice of Application pertaining to Rhodes Technologies, 72 FR 3417 (2007), comments and requests for hearings on applications to import narcotic raw material are not appropriate. Any bulk manufacturer who is presently, or is applying to be, registered with DEA to manufacture such basic classes of controlled substances listed in schedule I or II, which fall under the authority of section 1002(a)(2)(B) of the Act (21 U.S.C. 952(a)(2)(B)) may, in the circumstances set forth in 21 U.S.C. 958(i), file comments or objections to the issuance of the proposed registration and may, at the same time, file a written request for a hearing on such application pursuant to 21 CFR 1301.43 and in such form as prescribed by 21 CFR 1316.47. Any such comments or objections being sent via regular mail should be addressed, in quintuplicate, to the Drug E:\FR\FM\28MRN1.SGM 28MRN1

Agencies

[Federal Register Volume 73, Number 61 (Friday, March 28, 2008)]
[Notices]
[Pages 16715-16717]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6377]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Hi-Tech Pharmaceutcals, Inc.; Denial of Applications

    On August 16, 2007, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Hi-Tech Pharmaceuticals, Inc. (Respondent), of Norcross, 
Georgia. The Show Cause Order proposed the denial of Respondent's 
pending applications for DEA Certificates of Registration to import and 
manufacture ephedrine, a list I chemical, on the ground that its 
``registrations would be inconsistent with the public interest.'' Show 
Cause Order at 1 (citing 21 U.S.C. 824(a)(4) & 958(c)).
    The Show Cause Order specifically alleged that both Respondent's 
owner, Mr. Jared Wheat, and its Vice-President, Mr. Stephen D. Smith, 
had previously been convicted of controlled-substance felony offenses. 
Id. The Show Cause Order next alleged that on February 23, 2006, agents 
of the U.S. Customs Service and the Food Drug Administration (FDA) 
executed a search warrant at Respondent and seized various products 
containing ephedrine alkaloids that the company was manufacturing and 
distributing, as well as the raw materials used to manufacture these 
products. Id. at 2.
    The Show Cause Order further alleged that Respondent operated 
several websites which represented that they offered controlled 
substances for sale from Canada and that the ``drugs were made using 
good manufacturing practices in Canada,'' when, in fact, ``Hi-Tech 
manufactured many of these drugs, including various Schedule III and IV 
controlled substances, in the country of Belize and unlawfully imported 
them into the United States without a DEA registration'' in violation 
of 21 U.S.C. 957(a) and 21 CFR 1301.11. Id. at 2. Relatedly, the Show 
Cause Order alleged that on September 7, 2006, a federal grand jury 
indicted

[[Page 16716]]

Respondent, Mr. Wheat, Mr. Smith, and ten other individuals associated 
with the company, charging them with, inter alia, ``the unlawful 
distribution of controlled substances and conspiracy to import 
controlled substances into the United States.'' Id.
    On August 20, 2007, the Show Cause Order was served on Respondent 
by certified mail, return receipt requested. Thereafter, Respondent's 
counsel submitted a letter in which it waived its right to a hearing, 
but in which it also responded to several of the Show Cause Order's 
allegations. Ltr. of Joseph P. Schilleci, Jr., to Hearing Clerk, 1 
(Sept. 14, 2007). The factual assertions and arguments presented in 
this letter will be considered pursuant to 21 CFR 1301.43(c).
    I therefore conclude that Respondent has waived its right to a 
hearing. I therefore enter this Final Order without a hearing based on 
relevant material contained in the investigative file as well as 
Respondent's letter and make the following findings. See 21 CFR 
1301.43(e).

Findings

    On July 25, 2005, Respondent, a Georgia corporation, applied for 
two DEA registrations: one to import ephedrine and one to manufacture 
it. Ephedrine is a list I chemical, which is frequently diverted into 
the illicit manufacture of methamphetamine, a schedule II controlled 
substance. See 21 U.S.C. 802(34); see also 21 CFR 1308.12(d). 
Respondent's applications were submitted by Mr. Jared R. Wheat. On both 
applications, Respondent stated that ``Jared R. Wheat, [its] President 
and sole shareholder * * * was convicted on October 2, 1991[,] in the 
United States District Court, Northern District of Alabama * * * for 
conspiracy to distribute MDMA. He was sentenced to the custody of the 
Bureau of Prisons for thirty-six months (36) months [and] three years 
supervised release.'' \1\
---------------------------------------------------------------------------

    \1\ The investigative file also indicates that in September 
1992, Mr. Smith was convicted in the Georgia Superior Court of 
purchasing or possession of a controlled substance. As the letter 
from Respondent's counsel indicated, Mr. Smith ``is a Vice-President 
of [Respondent but] does not own any shares in'' the company.
---------------------------------------------------------------------------

    During the course of DEA's pre-registration investigation, agency 
investigators received information that several other federal agencies 
including the FDA and Federal Trade Commission were also investigating 
Respondent. Moreover, during an on-site inspection, Mr. Wheat told DEA 
investigators that he was currently importing ephedra or Ma Huang 
Extract. He also provided DEA investigators with a ``Certificate of 
Analysis'' which indicated that Respondent had imported from Sinochem 
Jiangsu Import & Export Corporation of Nanjaing, China, one thousand 
kilograms of Ma Huang Extract containing 8.2% total ephedrine 
alkaloids.\2\ The Certificate stated that ``[t]his product is 
concentrated from natural sources and does not contain either synthetic 
or fermentation source. All alkaloids are results from extraction and 
concentration of crude plant material.'' The Certificate also noted 
that ``water'' was used as the ``extract solvent.''
---------------------------------------------------------------------------

    \2\ During the inspection, Mr. Wheat provided the DIs with a 
product list and invoice which showed that it was manufacturing and 
distributing several products which contained ephedrine alkaloids. 
Each of the products had an ephedrine alkaloid content of less than 
five percent.
---------------------------------------------------------------------------

    On February 23, 2006, investigators from FDA and U.S. Customs 
executed a search warrant at Respondent's building. The FDA 
investigators seized various products. Simultaneously, the United 
States Attorney filed a complaint for forfeiture against various 
products which the FDA had seized on the ground that they were 
adulterated. These products were labeled as ``Lipodrene,'' ``Stimerex-
ES,'' and ``Betradene,'' and each of the products indicated that they 
contained 25 mg. of ephedrine alkaloids in each tablet. Subsequently, 
the U.S. District Court for Northern District of Georgia rejected 
Respondent's contentions and granted the Government's motion for 
summary judgment on its complaint for forfeiture. Hi-Tech 
Pharmaceuticals, Inc. v. Crawford, 505 F.Supp.2d 1341 (N.D. Ga. 
2007).\3\
---------------------------------------------------------------------------

    \3\ Regarding the seizure of ephedrine alkaloid products from 
Respondent, its counsel admitted that ``on August 15, 2007, the 
United States District Court for the Northern District of Georgia 
entered judgment in favor of the FDA.'' Ltr. of Joseph P. Schilleci, 
Jr., to Hearing Clerk, at 1 (Sept. 14, 2007). Respondent's counsel 
further stated that it was appealing the district court's decision. 
Id.
---------------------------------------------------------------------------

    On September 7, 2006, a federal grand jury returned a forty-five 
count indictment against Respondent, Jared Wheat, Stephen D. Smith, and 
nine other individuals. The indictment alleged, inter alia, that the 
defendants had conspired to manufacture in Belize and intentionally 
import, or attempt to import, into the United States, schedule III 
controlled substances (the steroids oxandrolone, oxymetholone, 
stanazolol) and schedule IV controlled substances (alprazolam, 
diazepam, lorazepam, phentermine, and zolpidem), in violation of 21 
U.S.C. 952(a)(2), 960(a)(1), 960(b)(4), and 963. United States v. 
Wheat, et al., No. 1:06CR382 (N.D. Ga.) (Indictment at 14-16, 23-24). 
The indictment also alleged that Respondent, Mr. Wheat, Mr. Smith, and 
others, knowingly and intentionally imported phentermine, Xanax 
(alprazolam), and Ambien (zolpidem) on various dates between February 
and May 2004. Indictment at 30-31.
    Regarding the indictment, Respondent's counsel stated that it ``is 
confident that the facts will show that it has been and is 
appropriately conducting its business within the bounds of the law.'' 
Letter of Respondent's Counsel, at 1. Respondent's counsel further 
contended that the indictment's allegations ``are incorrect and do not 
portray an accurate description of [it], either in the past or 
present,'' and ``that there is no basis for the Government's indictment 
of Hi-Tech.'' Id.
    The investigative file establishes, however, that several of the 
defendants named in the indictment have entered guilty pleas to various 
counts. As part of his plea agreement, B.W. admitted that he conspired 
with Wheat, Smith, and Respondent, ``to knowingly and intentionally 
import and attempt to import into the United States from Belize [the] 
Schedule IV controlled substances * * * [a]lprazolam, [d]iazepam, 
[l]orazapam, [p]hentermine, and [z]olpidem * * * all in violation of 
federal law.'' B.W. Guilty Plea and Plea Agreement at 1-2. B.W. further 
admitted that he ``had knowledge of attempts to import Schedule IV 
controlled substances and [that he] assisted in the manufacture of 
[these substances] on two (2) occasions.'' Id. at 2.
    Defendant D.W. admitted that he conspired with Wheat and Smith ``to 
knowingly and intentionally import and attempt to import into the 
United States from Belize anabolic steroids, Schedule III controlled 
substances, and to knowingly and intentionally import and attempt to 
import into the United States from Belize [the] Schedule IV controlled 
substances * * * [a]lprazolam, [d]iazepam, [l]orazepam, [p]hentermine 
and [z]olpidem * * * all in violation of federal law.'' D.W. Guilty 
Plea and Plea Agreement at 1. Finally, Defendant D.J. admitted in his 
plea agreement that he had knowledge that Wheat, Smith, Respondent, and 
others, ``did knowingly and intentionally * * * conspire * * * with 
each other and others to knowingly and intentionally import and attempt 
to import into the United States from Belize [the] Schedule IV 
controlled substances * * * [a]lprazolam, [d]iazepam, [l]orazepam, 
[p]hentermine and [z]olpidem * * * in violation of'' federal law. D.J. 
Guilty Plea and Plea Agreement at 1-2.

[[Page 16717]]

Discussion

    Section 303(h) of the Controlled Substances Act (CSA) provides that 
``[t]he Attorney General shall register an applicant to distribute a 
list I chemical unless the Attorney General determines that 
registration of the applicant is inconsistent with the public 
interest.'' 21 U.S.C. 823(h). In making this determination, Congress 
directed that I consider the following factors:

    (1) Maintenance by the applicant of effective controls against 
diversion of listed chemicals into other than legitimate channels;
    (2) Compliance by the applicant with applicable Federal, State, 
and local law;
    (3) Any prior conviction record of the applicant 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.

Id.

    ``These factors are considered in the disjunctive.'' Joy's Ideas, 
70 FR 33195, 33197 (2005). I may rely on any one or a combination of 
factors, and may give each factor the weight I deem appropriate in 
determining whether an application for a registration should be denied. 
See, e.g., David M. Starr, 71 FR 39367, 39368 (2006); Energy Outlet, 64 
FR 14269 (1999). Moreover, I am ``not required to make findings as to 
all of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); 
Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
    Having considered all of the factors, I conclude that factors two 
and four establish that Respondent's registration would be 
``inconsistent with the public interest.'' 21 U.S.C. 823(h). 
Respondent's application will therefore be denied.
    Here, the record establishes that between September 2005 and 
February 2006, Respondent illegally imported into the United States, 
1,000 kilograms of Ma Huang extract, which contained ephedrine 
alkaloids in a concentration of approximately eight percent. While at 
the time of the importation, ``harvested plant material * * * 
contain[ing] ephedrine * * * that preserve[d] the natural constituents 
in the ratios that are found in the plant's natural state'' was exempt 
from the CSA's requirements, DEA's regulation further provided that 
``[p]lant material subjected to chemical or physical extraction, 
concentration, chemical reaction, or other treatment that alters the 
plant's natural constituents [was] not exempt.'' 21 CFR 
1310.12(d)(1).\4\ Respondent did not have a registration to import the 
product, which contains a list I chemical and was produced through an 
extraction process, and thus was not exempt from the application of the 
Act. See 21 U.S.C. 957(a); 21 CFR 1310.12(d)(1). Respondent's 
importation of Ma Huang extract therefore violated federal law.
---------------------------------------------------------------------------

    \4\ On July 25, 2007, DEA published an interim rule which 
removed the exemption ``for unaltered ephedra plant material.'' 72 
FR 40738, 40741 (2007). This rule became effective on August 24, 
2007. Id. at 40742.
---------------------------------------------------------------------------

    Moreover, substantial evidence establishes that Respondent, its 
owner (Mr. Wheat), and vice-president (Mr. Smith), violated the CSA by 
importing schedule III and IV controlled substances (including anabolic 
steroids, multiple benzodiazepines, as well as phentermine and 
zolpidem) into the United States from Belize in violation of 21 U.S.C. 
952 and 957(a)(b). While the indictment sets forth only allegations, 
the plea agreements of several co-conspirators implicated Respondent, 
Mr. Wheat, and Mr. Smith, in the conspiracy to knowingly import 
controlled substances into the United States in violation of federal 
law. The agreements thus provide substantial evidence to support a 
finding that Respondent, Mr. Wheat, and Mr. Smith violated federal 
law.\5\ See Richardson v. Perales, 402 U.S. 389 (1971) (upholding use 
of hearsay evidence in administrative proceedings). Accordingly, I 
conclude that granting Respondent's application would be ``inconsistent 
with the public interest.'' 21 U.S.C. Sec.  823(h).
---------------------------------------------------------------------------

    \5\ In light of the evidence establishing that Mr. Wheat and Mr. 
Smith have committed offenses in violation of the CSA, I need not 
decide whether their prior convictions are too dated to be 
considered.
    I further note that Respondent imported listed chemicals which 
it then used to manufacture and distribute products which a federal 
court has held were adulterated within the meaning of the Food, 
Drug, and Cosmetic Act. See Hi-Tech Pharmaceuticals, Inc., v. 
Crawford, 505 F.Supp.2d at 1357. See also 21 U.S.C. 823(h)(5) 
(directing consideration of ``such other factors as are relevant to 
and consistent with the public health and safety''). This conduct 
also supports the conclusion that granting Respondent a registration 
would be ``inconsistent with the public interest.'' 21 U.S.C. 
823(h).
---------------------------------------------------------------------------

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(h), as well 
as 28 CFR 0.100(b) & 0.104, I order that the application of Hi-Tech 
Pharmaceuticals, Inc., for a DEA Certificate of Registration to import 
ephedrine, a list I chemical, be, and it hereby is, denied. I further 
order that the application of Hi-Pharmaceuticals, Inc., for a DEA 
Certificate of Registration to manufacture ephedrine, a list I 
chemical, be, and it hereby is, denied. This order is effective April 
28, 2008.

    Dated: March 17, 2008.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E8-6377 Filed 3-27-08; 8:45 am]
BILLING CODE 4410-09-P

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