Illegal biolab, reportedly China-backed, found in California
Rep. Carlos Gimenez, R-Fla., discusses the discovery of an illegal, reportedly China-backed, biolab in California with unlicensed mice and infectious agents.
A Fox News review of court records, health reports and interviews with people who did business with Universal Meditech Inc. (UMI), a California medical supply firm, raises serious questions about its legitimacy and Chinese ties – as well as an apparently illicit biolab.
The underground biolab in the central California town of Reedley – population 25,000 – was discovered late last year and immediately set off alarm bells with local officials who said they were unaware of what was taking place inside the previously vacant warehouse.
As multiple local, state and federal governmental agencies continue to look into the biolab, a report from the Centers for Disease Control and Prevention (CDC) identified 20 different infectious agents inside the building, which was once used to package food. That report found cultures of tuberculosis, dengue, HIV, COVID-19 and malaria interspersed with old lab equipment and slipshod storage, along with dead and dying mice in an overall unsanitary environment.
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"We don't have all the answers of what was happening in this lab," House Speaker Kevin McCarthy, R-Calif., said recently near Fresno. "This is very disturbing."
When municipal code enforcement officers entered the building in March, UMI personnel said they were making COVID-19 and pregnancy tests, according to an affidavit filed by a Reedley city official. No officials with the Fresno County Department of Health nor anyone else contacted by Fox News could explain definitively why the company purportedly making such tests was also in possession of potentially deadly agents.
The inability to get reliable information from UMI, its successor Prestige Biotech or its management – at a time when officials were unsure of what was happening and concerned about public safety – was reflected in the CDC report: "Prestige Biotech or various owners of the materials present in the warehouse have yet to cooperate with document requests from multiple partner agencies fully."
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UMI didn't spend much time in Reedley. Last fall, Fresno County health officials made contact with UMI at a warehouse 30 minutes away in Fresno, but the interactions with UMI there would signal the difficulties to come.
"We wanted to know what were you doing, what chemicals did you have on-site, what type of lab operations you had, and even at that time, they were unresponsive to us," Joe Prado, assistant director of the Fresno County Department of Public Health, told Fox News. Phone calls Fox News made to numbers associated with UMI led to disconnected lines or unreturned messages.
An examination of legal records related to UMI's affairs in Fresno revealed allegations of a company that flouted federal safety rules, lied to clients about the provenance and efficacy of its COVID-19 test kits, stiffed its own lawyers, and apparently has been ducking attempts to account for another alleged fraud.
One exasperated federal judge said UMI "routinely and intentionally" ignored his rulings, demonstrating "a stubborn resistance to [his] authority and justifies the most severe sanction available." UMI lost that case because the court entered a default judgment well before it ever went to trial.
In 2020, Jeff Johnston, the CEO of Louisiana-based CovidScan, agreed to purchase thousands of COVID-19 tests from UMI and then resell them to his customers.
"During the pandemic, it was the Wild, Wild West," Johnston recalled. "You could not maintain an inventory. Product was gone. You had municipalities and other people clamoring for tests."
The controversial biolab in California was shut down earlier in 2023. (KMPH Anthony Guevara)
But, when the UMI test couldn’t pass muster with the Food and Drug Administration (FDA), Johnston said he was left holding a bunch of test kits he could no longer sell.
"I think it was a lot of smoke and mirrors," Johnston said.
Johnston's UMI contact at the time was general manager Karekin Khatchadoorian, whom he described as very pleasant to work with but also evasive about the company's links to China.
"[Khatchadoorian] was very secretive about the ownership," Johnston said. "It was always a sidestep. He was never very clear on the ownership. He would dance around it."
Johnston also took issue with the labeling on the packaging that suggested the tests were produced in Fresno. "Do I believe it was made in the USA? No. I believe it was made in China."
International shipping records provided to Fox News by ImportGenius, a company that aggregates global shipping and import/export data, revealed UMI/Prestige received at least 16 trans-Pacific shipments in recent years. Almost always, the cargo ships originated in China with contents that ended up in Fresno. Product descriptions included: "HCG pregnancy test," "Plastic shell cotton swab," "Cleaning agent/bottle plastic label."
Before Johnston’s UMI venture went sour, he said he introduced Khatchadoorian to executives with Sensiva Health, another Louisiana company that was also looking for COVID-19 tests. Sensiva insisted that it only wanted kits that were American-made, and in January 2021, when satisfied that UMI could fulfill its needs, placed a $2.1 million order for 700,000 units.
Soon after sending a partial payment, Sensiva officials performed a quality-control review of the large order and suspected a bait-and-switch. Contrary to the high-quality samples Sensiva saw before signing the contract, the new kits were, according to court records, "made with flimsy, low-grade, translucent Chinese-made cassettes, and not with the solid, opaque, and high-quality plastic" that Sensiva expected. A lawyer for Sensiva declined comment.
For the next year, the two sides battled in federal court in a manner unremarkable for any business dispute ending up in litigation. Suddenly, in June 2022, UMI's legal team from the New Orleans law firm Liskow & Lewis pulled out of the case, according to court records.
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Almost immediately, UMI's new lawyers from another high-profile New Orleans firm ran into difficulties with their clients. Namely, UMI steadily refused to participate in its own defense.
UMI's effective withdrawal from the case led Judge Michael North in November 2022 to issue a scathing report on UMI's "contumacious and continuing discovery misconduct." That prompted another federal judge to issue a default judgment against UMI.
UMI's new lawyers were granted leave to withdraw from the case. The reason? Their clients had stopped talking to them.
Unaware of the difficulties in Louisiana, in fall 2021, Alabama-based Valor Distribution reached a similar agreement with Khatchadoorian and UMI for COVID-19 test kits. According to court filings, other defendants in business with UMI told Valor the kits did not need FDA certification. When that proved to be wrong, recall notices were sent, making thousands of test kits purchased by Valor worthless.
In April, Valor filed its own federal lawsuit. Their attempts to find anyone affiliated with UMI to serve notice about the lawsuit have failed. Valor has until October to do so or risk having its case dismissed. Valor’s lawyer refused comment to Fox News.
Back in Fresno, UMI was having problems with its landlord, and it retained local lawyer Justin Vecchiarelli to help at $295/hour. But, in September 2022 – at the same time UMI was stopping its participation in the Louisiana case – Vecchiarelli said he received a final partial payment for his legal work. He filed his own suit seeking payment of at least $7,128.84 in expenses, claiming UMI and its CEO, Zhaoyan Wang, had "duped and deceived him... into providing legal services to UMI that they never intended to pay for."
Neither Wang nor Khatchadoorian responded to Fox News’ requests for comment.
Vecchiarelli's lawsuit alleged that UMI comingled business accounts with various personal accounts and moved assets around to avoid claims by creditors.
"In or around October 2022, Wang transferred ownership of UMI to XiaoXiao [Wang], and potentially others, despite Wang retaining interests in and control over UMI," Vecchiarelli's lawsuit alleged. "This transfer was done with the intent and for the purpose of hiding Wang's role with UMI." The possible relation between Zhaoyan Wang and XiaoXiao Wang was unclear.
State and local officials said they were unaware what was going on inside the California biolab. (KMPH Anthony Guevara)
California business records obtained by Fox News confirmed this transfer took place. Vecchiarelli told Fox News he wouldn't discuss his former client's business practices while his suit continued.
Zhaoyan Wang did talk about her role at UMI under oath last September in the Louisiana-Sensiva case before she and the company completely stopped cooperating with the court's orders. According to a deposition transcript obtained by Fox News, Wang, speaking through an interpreter, had minimal knowledge of the company's operations even though she was CEO and part-owner.
Wang said she didn't use a company email address; instead, she communicated through a Chinese-based system called Baidu that's also the dominant online search engine there. Wang testified there was nobody in charge of UMI's financial department and she had great difficulty in providing first and last names of the 10 people she estimated worked at UMI.
"Yeah. Actually, I don't get involved in the – like, packaging or production. That's why I don't really know the names of those employees employed at those posts," Wang said.
Wang testified she neither held a scientific degree nor took any formal coursework in biomedicine. She also said she didn't know how many of UMI's workers were U.S. citizens or had authorization to be in the United States.
It's not clear when Wang arrived in the U.S. or if her current legal status allowed her to remain in the country. Her cousin, Zhaolin Wang, also a UMI employee, said she arrived in 2016.
Wang described how UMI started with the help of unnamed researchers in China and Canada "teaching us the – like, the components, the ingredients." A U.S.-FDA database of records linked UMI's work with pregnancy tests and other lab research to a company in British Columbia.
Canadian national and provincial health officials did not respond to Fox News’ inquiries for more information on the researcher, International Newtech Development, and its relations with Wang or UMI.
A phone number associated with International Newtech Development is no longer in service and other records indicate it’s no longer in business. Video from inside the Fresno warehouse taken last year and obtained by Fox News showed a dirty refrigerator with the word "Canada" written on a piece of paper stuck to the door.
The Centers for Disease Control and Prevention reported that it uncovered 20 different infectious agents inside the lab. (KMPH)
Court records and Wang's testimony showed that UMI's parent company is Chinese-based Guangdi Packaging Material Co. Ltd. UMI's import records showed several of the shipments received in Fresno came from Guangdi, but Fox News research could find no other proof of the company’s existence. An associated address connected Guangdi to the port city of Qingdao and the High-Tech Industrial Park, which appears to be affiliated with the Chinese government.
Nothing from UMI's past records reviewed by Fox News indicated work with the dangerous agents found in the Reedley location. The CDC report noted many of them were obtained from a private source that's been described to Fox News as an industry leader in providing biological matter. When asked about its work with UMI, the biological resource center American Type Culture Collection told Fox News, "ATCC abides by strict policies and procedures, ensuring that all materials are acquired, developed, maintained, and distributed in full compliance with applicable laws and regulations." ATCC has not been accused of any wrongdoing in connection with UMI’s activities.
The CDC's report noted the uncovered agents fell into its "risk group 2 & 3" categories. While all are potentially dangerous, none of those agents fell into the highest level of concern; therefore, UMI would not have been required to register with the CDC under its Select Agent Program.
The CDC report determined "there is insufficient evidence at this time to conclude that there has been a violation" of two federal laws narrowly focused on the importation or possession of infectious biological agents.
It's been eight months since the underground lab in Reedley first attracted attention and more than five months since it was shut down. There have been no arrests.
"As a representative of the Fresno County Department of Public Health, we can't speak to any of their criminal actions," Prado said. "It's outside our purview."
The Fresno County District Attorney's office told Fox News the investigation was still in its preliminary stages, and it’s uncertain whether or when charges will come.
The California Department of Public Health confirmed it's working with local, state and federal partners "to assess the situation," but in a statement to Fox News, the agency also suggested the matter "will take time to resolve."
"We don't have all the answers of what was happening in this lab," House Speaker Kevin McCarthy, R-Calif., said recently near Fresno. "This is very disturbing."
The regional U.S. Attorney's Office would neither confirm nor deny any ongoing investigation. The FBI and FDA responded in the same way.
"This is bigger than Fresno County. This has potential for other areas," Prado warned. "So, we want to make sure this doesn't happen to any other community, any other city, any other county in California and in the United States."
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In fact, the issue might extend beyond California.
After years of shipments that ended up in Fresno, the most recent shipping report for UMI/Prestige from April 15 showed the final destination was a new location: a storefront in a Las Vegas strip mall next to a pharmacy and a barber shop. That container ship left China carrying what's described as an "experiment table billboard centrifuge refrigerator sofa."
