Chinese-Owned Bio Lab Update: Million-Dollar Mice, Fake Bankruptcy, Recalled COVID-19 Tests, PPP Loans, and Tax Credits

Official White House Photo by Shealah Craighead

RedState was one of the first outlets to bring the news of an illegal bio lab, owned by Chinese nationals, operating in the small town of Reedley in California’s Central Valley. In the week that followed, we learned a lot more about what was happening there and the entities behind it, but there are still quite a few unanswered questions.

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To recap:

It began with a garden hose attached illegally to a warehouse near the center of town. The building was supposed to be vacant. When code enforcement officers from the city went to investigate, they discovered that it was in use and observed several code violations.

According to a declaration from Humero Prado, Assistant Director of Fresno County Public Health…investigators discovered that one room of the warehouse was used to produce COVID-19 and pregnancy tests. In other rooms, investigators found blood, tissue and other bodily fluid samples.

Health officials discovered nearly 1,000 lab mice, 200 of which were already dead.

Also found were thousands of vials, many of which contained biohazardous materials including human blood, and other unknown substances.

“A lot of these labels have been removed from bottles so there was only so much testing. We could do those chemicals,” Prado continued.

An onsite representative for Prestige, Wang Zhaolin, told investigators that mice were “genetically engineered to catch and carry the COVID-19 virus.” Due to the conditions, the mice were euthanized.

These [samples found by the CDC] included both bacterial and viral agents, including: chlamydia, E. Coli, streptococcus pneumonia, hepatitis B and C, herpes 1 and 5 and rubella. The CDC also found samples of malaria.

The Reedley facility was leased by some combination of Prestige Biotech, Inc (PBI), a Nevada company that is not registered to do business in California, and Universal Meditech, Inc. (UMI), a company now owned and managed by Chinese nationals that has operated in California since at least 2015.

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Here’s what we’ve learned over the past week:

1. Million-Dollar Mice

In emails to Fresno County officials, Xiquin Yao, PBI president, said that the weaponized mice held at the Reedley facility are worth “hundreds of thousands or even one million [dollars]” and that they “are a very precious variety that has been cultivated for seven years by UMI.”

2. COVID-19 Test Kits Recalled

In November 2022 UMI recalled more than 56,000 COVID-19 rapid test kits they distributed but which they didn’t actually manufacture, according to an FDA document. “Neither Universal Meditech Inc. nor SML Distribution LLC, has provided the FDA with adequate data to show that the test’s performance is accurate,” the recall notice states.

3. They got a California Competes tax credit, because of course.

California Globe revealed that UMI received a “California Competes” tax credit in 2019, the term of which was three years. More information on whether they were able to meet the criteria for the entire time and what the ultimate outcome of what was given the pandemic and UMI’s reported financial problems is being requested.

document released on March 24, 2019 by Governor Newsom’s Office of Business and Economic Development, a California Competes tax credit allocation agreement of $360,000 was cemented with UMI.

4. Fresno County officials were quite helpful

When UMI moved 45 miles up California Highway 99 from Tulare to Fresno in 2019, company officials had lots of praise for the county and the government programs they were hooked up with. Zhaoyan Wang told The Business Journal:

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“The EDC has provided us with guidance and HR resources as well as worked with us in terms of the NEO program, which has helped us save a lot of time and working capital on employee hiring. The EDC has also informed us about other incentives available for business, such as California Compete Tax Credit and referred us to proper departments and personnel for further assistance.”

Since the news of what was found in the “lab” broke, Fresno County officials have been under fire, with some alleging they didn’t act quickly enough when they knew of safety violations at the UMI’s former location in Fresno and when suspicions of something illegal happening in Reedley were reported. Could this relationship have impacted officials’ willingness to look into things?

4. $150,000 in forgiven PPP loans

From local news source Your Central Valley:

According to the oversight committee, Universal Meditech Inc. received its first loan amount of $74,912 for payroll, approved on April 27, 2020. The loan amount forgiven was $75,788.

Just under a year later, Universal Meditech Inc. received a second loan amounting to $74,912: $74,910 for payroll, $1 for utilities, and $1 for “not provided.” The loan was approved on February 2, 2021. The loan amount forgiven was $75,630.

For both applications, the company provided its address as 1320 E. Fortune Avenue, a site that caught fire in August 2020.

We are currently investigating how many related corporate entities received PPP loans and if they were forgiven since we know that other California businesspeople with links to China have been criminally charged for PPP fraud after setting up shell corporations during the pandemic.

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5. Bankruptcy? What bankruptcy?

In the original story, the PBI representative claimed that UMI went into bankruptcy proceedings and that as the largest creditor, they were protecting the assets (mice, etc) by moving them to the Reedley facility for storage. However, no bankruptcy filings – not a single document – have been found after an exhaustive search of United States Bankruptcy Court records.

PBI claims that they had loaned millions of dollars to UMI so they “had to be” UMI’s largest creditor, and as such simply took possession of UMI’s assets. According to court documents and emails between Fresno County inspectors, though, there is no listing of that property or valuation, as would occur in an actual bankruptcy case.

What has been found is expensive litigation. In the federal courts, there’s a $2.2 million judgment against UMI out of Louisiana (Sensiva Health, LLC vs. Universal Meditech, Inc., et al), and a pending case in Alabama brought by Valor Distribution, a company that distributed UMI-produced COVID-19 tests that were later recalled by the FDA. In California, UMI is being sued by its former attorney, its former Realtor, and its former landlord for unpaid bills.

6. Shady County Inspections History

In 2019 UMI moved from Tulare to Fresno, but in August 2020 there was a fire, which was later deemed electrical, at that facility. Even though there were violations found that contributed to the fire, such as non-permitted electrical work and lab wall structures, county officials didn’t hold the company’s feet to the fire as they should have.

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On September 8, 2020, a Fire Damage Report was completed by the City Building and Safety Services Division.

Between 2020 and 2022, all City inspections were scaled back due to the Covid-19 pandemic, including Fresno Fire and Code Enforcement inspections.

In November 2022, various inspections took place, including one by Fresno County Environmental Health. Amidst inspections by City Code Enforcement, Fresno Fire inspectors, and County officials – the CEO of UMI, XiaoXiao Wang notified city officials of a dispute with the landlord and subsequent court proceedings related to the lease.

On December 27, 2022, the tenant moved out and the case was closed.

When UMI moved, they didn’t tell the county that they were allegedly in bankruptcy proceedings.

They’re currently trying to reopen in a new building; Fresno County officials have said no so far.

7. A maze of corporations, one based in China

Numerous corporations in Nevada, California, Colorado, and Canada are related to the labs and their officers:

  • Universal Meditech, Inc (Fresno, CA)
  • Advance Meditech Inc (Tustin, CA)
  • Advance Meditech LLC (Fresno, CA/China)
  • Advance Meditech Investors, LP (Tulare, CA)
  • Advance Meditech Investors, LLC (San Diego, CA)
  • Prestige Biotech Inc (Las Vegas, NV)
  • PBI Diagnostic Laboratory LLC (Las Vegas, NV)

In addition, a property management company that owns the building UMI once occupied in Tulare is owned by Chinese nationals linked to the laboratory and its related corporate entities. And, there are related corporations in Canada.

Zhaoyan Wang is related to all of these entities in some way. In the case of Advance Meditech LLC, he was the manager when it was formed in April 2019 but in January 2020 was removed as manager and replaced by He Qiang, who lives in China. Zhaoyan Wang has been listed as the agent of service for the LLC since January 2020.

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In the case of UMI, Zhaoyan was listed as CEO, Secretary, and agent on a February 4, 2022, filing with the CA Secretary of State. But on October 21, 2022, he was removed and Xiaoxiao Wang is the CEO.

8. Ongoing criminal investigation

Reedley City Manager Nicole Zieba told Your Central Valley that a federal criminal investigation is ongoing, and Rep. Jim Costa (D-CA), who represents Reedley, is pushing to ensure that federal officials, including the FBI, are involved and perform a complete investigation. He got involved back in March when Zieba called his office, frustrated by “the inability to get anyone to be accountable either at the county or the state level.” According to Your Central Valley:

The company behind the lab, Prestige Biotech Inc, told Fresno County and city officials some of the representatives lived in China.

While the addresses they provided could never be completely confirmed, our station spoke with several people involved with the company on the phone who had direct knowledge of the people who owned the lab. They declined to comment on whether the main people behind the lab lived in China.

Costa worries about the connection, especially since China continues to hide and misrepresent covid information. Not to mention, recently Several U.S. agencies reported it is possible covid leaked from the Chinese lab out of Wuhan.

“The worst-case scenario is covid spread and concern about a lab in Wuhan China comes to mind and that is the worst-case scenario,” said Costa.

That is why Costa is asking for answers.

“Who owns the labs, where is the money? Where do you trace the true intent of the products that are being produced? And why are they not being regulated for safety or confidence?” questioned Costa.

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It’s clear that this is just the tip of the iceberg in determining the scope of what’s been happening in Tulare, Reedley, Fresno, and likely other cities across California and perhaps the country. RedState is actively investigating several aspects of this story and will report more as they are confirmed.

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