A man who operated a biolab in Reedley was convicted Tuesday of fraudulently selling $3.8 million worth of COVID-19 tests that he obtained from China and passed off to customers as being American-made.
Following a two-week federal trial in Fresno, a jury also found 64-year-old Jia Bei Zhu guilty of conspiracy to commit wire fraud, eight counts of wire fraud and a count of making false statements to the FDA about his identity.
Beginning in August 2020 through March 2023, Zhu, his romantic partner Zhaoyan Wang and others at their company, Universal Meditech Inc., imported faulty COVID tests from China and sold them, representing to customers that the tests were made in the U.S., authorized by the FDA and were effective in detecting the virus, according to prosecutors.
But customers testified during the trial that the tests they purchased were missing pieces and did not work, according to prosecutors and court records.
Employees testified that they were told to repackage the tests into boxes labeled “Made in the USA” and, while they knew it was wrong, did so out of fear of losing their jobs, according to prosecutors.
U.S. Atty. Eric Grant said in a statement that Zhu, a Chinese national, “exploited a public health crisis for his own gain.”
“He flouted the lawful authority of the FDA and deliberately deceived the public by repackaging low-quality, foreign-made test kits at a time when accuracy and reliability were critical,” Grant said. “This conduct, tied to the unlawful operations uncovered at the Reedley laboratory, put lives at risk.”
Zhu’s attorney, Anthony Capozzi, did not immediately return an email seeking comment on Thursday.
Zhu’s partner, Wang, is charged with conspiracy to commit wire fraud, wire fraud and distribution of adulterated and misbranded medical devices in connection with the case. Authorities allege she fled to China with the couple’s young son shortly before Zhu’s arrest, according to federal court records. Wang has not entered a plea and could not be reached for comment.
The case sparked a Congressional investigation and a national conversation about the presence of small, independent labs and the lack of laws regulating them.
Zhu’s business began attracting attention in 2022 when one of his customers filed a civil lawsuit against Universal Meditech, which led to a court-ordered inspection of the company’s facility in Fresno. Inside, they found an “unsanitary warehouse that was far below the established quality standards for facilities that house medical devices,” according to a news release from the U.S. Attorney’s Office.
Prosecutors allege he tried to escape scrutiny by moving the business to Reedley, a town of about 25,000 on the eastern banks of the Kings River, about 30 minutes outside Fresno and changing the company name to Prestige Biotech Inc.
But alleged efforts to keep the operation under wraps failed.
A code enforcement officer who noticed a putrid smell and a green garden hose sticking out of the side of a supposedly vacant warehouse in the city led to the discovery of the tests and a biolab that contained vials filled with liquid that bore frightening labels such as “Malaria,” “COVID-19,” and “HIV” and housing for 1,000 lab tested mice.
The Food and Drug Administration, Centers for Disease Control and Federal Bureau of Investigation determined that the pathogens and toxins found in the warehouse were part of a failed effort by Universal Medtech to manufacture the COVID tests and “did not pose any risk to humans,” according to the news release.
While Zhu was in custody awaiting trial in California in January, federal officials and the Las Vegas Metropolitan Police Department searched a home on Sugar Springs Drive, in Las Vegas where a biolab was allegedly operating in the garage.
Sheriff Kevin McMahill said the materials discovered inside the home were consistent with what was found in Reedley. Zhu had previously listed the Sugar Springs Drive address as collateral for bail, court records show.
It is not clear what authorities found in the home or what the plan was for the materials. The FBI in Las Vegas did not immediately respond to a request for comment on Thursday.
Zhu has not been charged with any crime in connection with the Las Vegas investigation. Capozzi, his attorney, said in a statement to news outlets earlier this year that his client is “not involved in any kind of a biolab being conducted in a home in Las Vegas.”
“What went on in that residence we are unaware of,” he said.
Zhu faces up to 31 years in prison at a sentencing hearing in August.
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