Hat tip BBG:
https://www.theepochtimes.com/article/behind-a-secret-chinese-biolab-in-california-a-global-web-of-connections-5498112?utm_source=ref_share&utm_campaign=facebook&rs=SHRNCMMW&fbclid=IwAR3xoDQ_uCQiJXCH0ljuLWISPkk5ukvxa7mn0rIakfP0wy8wvSu2tQJv66oBehind a Secret Chinese Biolab in California, a Global Web of Connections
Chinese companies related to the biolab have a troubling history in the United States, Canada, Hong Kong, and a handful of other countries.
Behind a Secret Chinese Biolab in California, a Global Web of Connections
A collage of the biolab in Reedley, Calif., on July 31, 2023. (Fresno County Public Health Department/Judicial Watch, Nathan Su/The Epoch Times, Courtesy of City of Reedley)
By Steve Ispas, Lear Zhou
|
Oct 19, 2023
Updated:
Oct 19, 2023
Note: This article has been updated to include details of the Oct. 19 arrest of Jia Bei "Jesse" Zhu.
The discovery of a black market Chinese biolab operating in California, and the subsequent investigation into it, has exposed a tangled web of shell companies obscuring ownership and loopholes that caused delays in cleanup and informing the public.
The public found out in March about a secret biolab operating in a warehouse in Reedley, California, about 25 miles southeast of Fresno.
But the warehouse and its biological hazards were discovered months earlier, on Dec. 19, 2022, by Jesalyn Harper, a code enforcement officer with the City of Reedley Fire Department.
Responding to an anonymous tip about the supposedly vacant warehouse, Ms. Harper discovered thousands of vials of bacterial and viral agents, including coronavirus, chlamydia, E. coli, streptococcus pneumonia, HIV, hepatitis, herpes, rubella, and malaria.
The business, operated by Prestige Biotech Inc., was also packaging and mailing out COVID-19 and pregnancy test kits, as well as housing nearly 1,000 lab mice.
A map illustration shows the location of the biolab in Reedley, Calif. (Illustration by The Epoch Times, Nathan Su/The Epoch Times, Shutterstock)
A map illustration shows the location of the biolab in Reedley, Calif. (Illustration by The Epoch Times, Nathan Su/The Epoch Times, Shutterstock)
Ms. Harper reported her findings to the City of Reedley, which contacted the FBI on the same day. But there was no single authority that could deal with all of the pathogens, chemicals, and biological hazards.
Eventually, a maze of agencies got involved in the investigation and cleanup, including city, county, and state authorities, as well as federal agencies such as the FBI, the Centers for Disease Control and Prevention (CDC), the Environmental Protection Agency (EPA), and the Food and Drug Administration (FDA).
The Biolab Discovery
The warehouse, located at 850 I Street in Reedley, was built in the 1950s mainly as a food packing plant. Trucks would drive up to the alcove area in front of the roll-up doors to load up.
More Articles
IN-DEPTH: More Details on Black Market Chinese Biolab Surface as Politicians Point Fingers
IN-DEPTH: More Details on Black Market Chinese Biolab Surface as Politicians Point Fingers
Black Market Biolab Uncovered in California Linked to China
Black Market Biolab Uncovered in California Linked to China
After Ms. Harper received the anonymous complaint about vehicles parked in the alcove, she went to investigate and also noticed a garden hose going into the building via a door being propped open—a potential plumbing violation.
Ms. Harper told The Epoch Times that she knocked at the door and saw three people boxing up pregnancy tests. One of them spoke no English, while the other two spoke very broken English.
At the beginning, Ms. Harper said the trio were very cooperative, but as she walked to the southern part of the building they became deflective.
"What do you do with the mice?" she recalled asking.
"We use the mice for experiments," they replied.
"What kind of experiments?"
"Oh, I don’t know, we just give them water."
"What’s in the refrigerators?"
"Just stuff for making the tests."
As Ms. Harper asked more specific questions, she said the staff answered less and less, pushing for her to leave. Once she saw labels on the fridges such as "blood," "HIV," she realized it was a potentially hazardous environment and left the building.
Jesalyn Harper, a code enforcement officer with the City of Reedley Fire Department. (Courtesy of Jesalyn Harper)
Jesalyn Harper, a code enforcement officer with the City of Reedley Fire Department. (Courtesy of Jesalyn Harper)
She reported her discovery to City of Reedley officials, who contacted the FBI immediately and met with them two days later, on Dec. 21, 2022.
The FBI took all of January 2023 to investigate and finally deemed the warehouse safe for city employees in early February.
When Reedley city officials returned to the warehouse on March 3 with an inspection warrant, they reported that no items had been removed from the lab, although some additional items had been stored since December.
Who's in Charge?
For Ms. Harper, the process was just beginning. She began to work with the state and county to determine which organizations needed to be involved.
“We had to look at these labs and break them down component by component and see who had the authority for each component," Ms. Harper told The Epoch Times.
"For example, the California Department of Public Health would have authority over medical devices like pregnancy tests; DTSC [the Department of Toxic Substance Control] would have oversight over some of the chemicals, possibly how they were being used."
Experts in medical waste and environmental health were brought in to address the items in the refrigerators, medical waste, human waste, blood, and used pregnancy tests.
The EPA and FDA were also involved, and both agencies retained some of the documentation and paperwork found in the lab.
Each item had to be dealt with separately—each drawer, each box, each container, each refrigerator, and each pallet had to be looked at by various departments depending on what was found.
Meanwhile, Ms. Harper had been feeding and watering the lab mice found onsite while she and other city officials were figuring out who had authority.
They discovered on March 16 that no one in the U.S. government clearly has regulatory authority over lab mice, so Ms. Harper used the California Health and Safety Code that references animal cruelty to obtain a warrant. A veterinarian then recommended to have the mice humanely euthanized, which took place after obtaining the requisite permit on April 12.
image-5513057
Nearly 1,000 mice were kept for experimentation, 178 of which were already dead due to the rancid conditions. The mice had resorted to “cannibalism,” in which the more dominant rodents ripped the hair and skin of inferior ones. (Fresno County Public Health Department/Judicial Watch)
All other biologicals were removed by July 8, after an abatement warrant was authorized by the Superior Court of California–Fresno County. All other assets were moved during the first two weeks of August.
An emergency ordinance, No. 2023-008, passed at the Reedley City Council meeting on Sept. 12 temporarily placed a ban on the establishment of warehousing and laboratories with biosafety levels 2 through 4 within the city limits. The City of San Carlos in the Bay Area has a similar ban.
"I’ve had a lot of sleepless nights knowing there is no one out there looking for these labs. This could be happening all over the United States," Ms. Harper said.
"It's been an eye-opening experience, realizing the many cracks in our government for these types of organizations to fall through, and also realizing that the government is not our first line of defense."
Ms. Harper said these types of under-the-radar entities can purchase "a lot of chemicals and a lot of biologicals easily and no one is watching over them to make sure they know what they are doing."
"We have to make sure these labs are not able to come here until there is oversight," she said.
Who Owns the Secret Lab?
The biolab in Reedley is owned by Prestige Biotech Inc., but a closer look into a complex network of companies and employees, including Prestige, all ultimately lead back to Jia Bei "Jesse" Zhu, a Chinese national with a Canadian passport.
Just hours after this article was published on Oct. 19, Mr. Zhu was arrested in California and charged with manufacturing and distributing misbranded medical devices and for making false statements to the FDA. A sealed indictment had been filed on Oct. 18.
Mr. Zhu faces a maximum of three years in prison for the misbranding charge and five years for the false statements charge according to the U.S. Attorney's office for the Eastern District of California.
According to court documents, between December 2020 and March 2023, Mr. Zhu and others allegedly manufactured, imported, sold, and distributed hundreds of thousands of COVID-19 and other test kits in the United States and China. They did so through the companies Universal Meditech Inc. and Prestige Biotech Inc. without proper authorization.
“As part of his scheme, the defendant changed his name, the names of his companies, and their locations,” said U.S. Attorney Philip A. Talbert.
The criminal complaint alleges that during the investigation, Mr. Zhu made several false statements to FDA officials, including using a false name and falsely representing his knowledge about the company's activities.
City of Reedley staff were told by Prestige Biotech president Yao Xiuqin that his company had taken over the warehouse—including the biological materials, samples, and lab mice—from Universal Meditech Inc. after the latter claimed bankruptcy, according to a court document filed on June 15.
Prestige Biotech is the main creditor of Universal Meditech.
Public records show that Prestige Biotech was first registered in Nevada to Wang Zhaolin (also known as Lynn Warner) on April 3, 2019, before current company president Mr. Yao, who’s based in China, took over on May 28, 2021.
Universal Meditech was established in Tulare, California, on Nov. 25, 2015, naming Mr. Zhu as CEO. The company obtained a California business license on March 20, 2019.
"Universal Meditech was started by a group of Canadian and Chinese investors and specializes in research, development and assembly of diagnostic test kits used in dairy cattle reproduction," said Paul Saldana, who was president and CEO of the Tulare County Economic and Development Center in 2015, according to Visalia Times Delta.
image-5513061
image-5513062
(Left) The interior of a biolab in Reedley, Calif., on July 31, 2023. (Courtesy of City of Reedley) (Right) During the pandemic Universal Meditech Inc. switched from a cattle reproduction related business to producing pregnancy test kits and COVID-19 test kits. (Tiziana Fabi/AFP via Getty Images)
Shortly after the pandemic started in March 2020, Universal Meditech switched from a cattle reproduction-related business to producing pregnancy test kits and COVID-19 test kits.
In August 2020, a fire broke out at the company's Fresno location and a subsequent environmental health inspector’s visit found that Universal Meditech didn't have a hazardous materials plan for storing ethanol in the warehouse.
Current documents filed with the California secretary of state don't show Mr. Zhu as CEO of Universal Meditech anymore, instead naming Wang Xiaoxiao as CEO, chief financial officer, and secretary, with an address in south central Fresno.
Another name connected to Universal Meditech and many other similar companies is Wang Zhaoyan, who’s also known as Wang Yan.
Ms. Wang is listed as president of Universal Meditech in an online business directory, and The Epoch Times obtained a plumbing permit issued to Ms. Wang of Universal Meditech from the City of Tulare in 2016. An FDA filings report for Universal Meditech also lists Ms. Wang as the "official correspondent."
Ms. Wang is also a principal in another California-based company, Superior Meditech Investments LLC, and an officer or managing member for three other related companies based in Nevada—PBI Diagnostic Laboratory LLC, Medi-Source LLC, and David Destiny Discovery LLC.
She’s also listed as executive director and general manager for a company in Qingdao, China, called Ai De Biopharmaceutical Industry (Qingdao) Co. Ltd.
The general manager for Ai De Biopharmaceutical is also the president for Prestige Biotech (the secret biolab in Reedley that bailed out Universal Meditech), according to California and Nevada business filings and a Chinese company directory.
All of the executives and all the companies eventually lead back to Mr. Zhu, the Chinese man with a Canadian passport.
(Left) 1155 E. North Ave. Suite 101, Fresno, Calif., 83725, is an address used by Advanced Meditech LLC in business filings, but appears to have a new tenant, “Bella” on Sept. 23, 2023. (Ping Chen/The Epoch Times). (Right) 1320 E. Fortune Ave. Suite 102 Fresno, Calif., 93725, is an address used by Advanced Meditech LLC in business filings, but appears to be an empty building, on Sept. 23, 2023. (Ping Chen/The Epoch Times)
(Left) 1155 E. North Ave. Suite 101, Fresno, Calif., 83725, is an address used by Advanced Meditech LLC in business filings, but appears to have a new tenant, “Bella” on Sept. 23, 2023. (Ping Chen/The Epoch Times). (Right) 1320 E. Fortune Ave. Suite 102 Fresno, Calif., 93725, is an address used by Advanced Meditech LLC in business filings, but appears to be an empty building, on Sept. 23, 2023. (Ping Chen/The Epoch Times)
Mr. Zhu and several of his companies have been mired in legal battles stretching from Canada to Hong Kong to the United States since 2008.
In September 2010, Mr. Zhu filed a proof of claim as "the owner" of Ai De Biopharmaceutical in a bankruptcy proceeding for yet another of his companies, JingJing Genetics Inc.
"The sole shareholder of Ai De is a British Virgin Island company (Unique Way Technology Limited) which, in turn, is owned by IND, which is owned by Zhu," according to a 2016 ruling by the Supreme Court of British Columbia in Canada.
Ai De Biopharmaceutical's street address in Qingdao is the same as other Chinese medical firms such as Qingdao Guangdi Packaging Material and Ai De Diagnostic. According to import records, most of these firms have shipped medical supplies to Universal Meditech and Prestige Biotech.
Mr. Zhu resigned from his positions of chairman of the board and general manager at Ai De Biopharmaceutical in November 2018, according to Chinese documents.
The Epoch Times called several numbers for Ai De Biopharmaceutical's headquarters in China, but the numbers have been disconnected or are no longer in service.
Jessie Zhu's Operations
Mr. Zhu was born in China in 1961 and obtained a Bachelor of Science degree from the Beijing University Medical Department in 1984 and a master's degree from the Peking Union Medical College Hospital in 1988. He went on to conduct bio research at the University of British Columbia in Canada, according to Sina Finance.
In 1991, Mr. Zhu established IND Dairytech Ltd in Vancouver and became chairman of the board.
In the late 1990s, Mr. Zhu flew a dozen Holstein cattle (a breed known for high milk production) from Quebec to Beijing to enhance milk production in China, where it was in great need.
A decade later, Mr. Zhu's focus switched to breeding technologies. Rather than transporting cattle to China, IND Dairytech began sending Holstein semen and embryos in an effort to develop cattle herds.
Primarily serving customers in Canada, IND Dairytech was listed on the Toronto Stock Exchange in 2008, delisted in 2011, and acquired shortly afterward by IND Lifetech, another company controlled by Mr. Zhu.
image-5513065
JingJing Genetics' principals in 2012 were ordered to pay $6.2 million to XY for allegedly stealing the latter's technology to manufacture and sell sexed semen for “non-human mammals” such as cattle. (Indranil Mukherjee/AFP via Getty Images)
The Chinese characters of "Ai De" are also in the upper left corner of IND Lifetech's logo.
Not long after IND Lifetech acquired IND Dairytech, it changed its name to JingJing Genetics, still based in Canada and controlled by Mr. Zhu.
In 2008, JingJing Genetics was sued by XY LLC, a Colorado-based company that claimed damages for "conspiracy, deceit, breach of confidence, breach of contract, and inducing breach of contract."
XY had developed the technology to "choose the sex of the offspring using sexed semen or sexed embryos" for "non-human mammals, including cattle, horses, pigs, and endangered species," according to an online statement.
The company was "the master licensee in control of all sperm sorting in non-human mammals worldwide."
JingJing Genetics was allegedly stealing XY’s technology to manufacture and sell bovine sexed semen, but without the strict controls required from a licensee.
The case was decided in 2012, with the judge ruling against JingJing Genetics for violating intellectual property agreements.
image-5513313
JingJing’s three principals at the time—Mr. Zhu, Selen Cui Feng Zhou, and Jin Tang—were found liable for "civil fraud and conspiracy to cause economic injury" and were ordered to pay CA$8.5 million (US$6.2 million) to XY, according to a statement at the time.
Canadian Judge Stephen Kelleher also issued JingJing and its principals a permanent injunction from using the so-called cytometer technology that analyzes and sorts cells for choosing the sex of the offspring.
However, days after the judge's ruling, XY received information that Mr. Zhu had set up a new company, Fraser Biomedical Inc., "for the purpose of secretly producing sexed semen using XY’s technology," according to a report by the Canadian Broadcast Network.
Judge Kelleher subsequently found Mr. Zhu in contempt for nonpayment of the CA$8.5 million and in 2015 sentenced him to jail for six months. But Mr. Zhu had fled Canada in 2014, and The Epoch Times was unable to find evidence that he has ever returned.
While ruling in another British Columbia Supreme Court case involving Mr. Zhu and his many companies, Justice Shelley Fitzpatrick said, "Zhu’s counsel indicated to me that Zhu is afraid of setting foot in this jurisdiction for fear that he will be arrested," according to court documents.
In that case, Judge Fitzpatrick ruled in 2016 that Mr. Zhu and his employees were to pay an additional CA$330 million (US$242 million) to XY for continued conspiracy to obtain intellectual property and confidential information.
"It is difficult to express the degree and scope of Zhu's wrongdoing in relation to his concerted plan and actions to steal XY’s Confidential Information for his own financial ends," Judge Fitzpatrick wrote in her ruling.
Court documents show transcripts from messenger app WeChat between Mr. Zhu and Mr. Xu from 2014. The messages reveal that Mr. Zhu’s goal was "total bankruptcy" for XY.
"If the new system is swiftly marketed, causing the overall sexed semen production cost to fall by twice as much, how do you think they are going to live from now on? ... So I propose using about 3 years in making [XY] collapse or be acquired cheaply," Mr. Zhu wrote in a text to Mr. Xu in May 2014.
"At the most opportune time, to acquire [XY] using the best price should be our basic strategy. Before that, we shall engage in attrition with them, drag them on as much as possible, drag them down, to let them feel all the time the sword of Damocles is on their heads. For this, we have already designed a comprehensive operational scheme."
image-5513073
image-5513074
(Left)The interior of the biolab. (Courtesy of City of Reedley) (Right) Thousands of vials of bacterial and viral agents were discovered at the biolab. (Fresno County Public Health Department/Judicial Watch)
An email exchange from April 2011 was also highlighted in the 2016 ruling.
In an email to Mr. Tang and Mr. Zhu, Mr. Xu wrote, “Well it seems American imperialism is very cunning, suggest to make an imitation one,” clearly referring to XY.
Mr. Zhu replied, "The law is strong, but the outlaws are ten times stronger."
In her ruling, Judge Fitzpatrick said: "The evidence makes clear that all of these defendants each played a part in the overall plan to steal XY’s confidential information for their own use by various means.
"This was all done for the benefit of the IND Group.
"As an overarching comment, it is difficult to express the degree and scope of Zhu’s wrongdoing in relation to his concerted plan and actions to steal XY’s confidential information."
Hong Kong Connection
In 2014, two years after the British Columbia Supreme Court ruling against JingJing Genetics, XY still hadn't received the CA$8.5 million in damages. In further pursuit of the damages, XY sued another company controlled by Mr. Zhu—this time in Hong Kong.
XY sought to access its damages from the defendant's frozen HSBC bank account connected to yet another company controlled by Mr. Zhu, Grand Network Technology Co. Ltd (GNT).
An example of a page from court documents on the case among XY, Mr. Zhu, and Grand Network Technology. (Vlex)
An example of a page from court documents on the case among XY, Mr. Zhu, and Grand Network Technology. (Vlex)
GNT was incorporated in the British Virgin Islands in 2000 and then registered as a private company in Hong Kong in 2014, according to court documents.
Peter Wang and another man were appointed as GNT's first directors and major shareholders, as they were also employed by companies within IND Group, the group of companies controlled by Mr. Zhu with operations in Canada and China. Peter Wang is Mr. Zhu's brother-in-law.
Although still marked as “active” in Hong Kong's company directory, GNT appears to be a shell company, as no website, services, or contacts are listed.
Mr. Zhu and GNT appealed the case in Hong Kong on two grounds: one was jurisdiction-related, and the other was that Mr. Zhu didn't own GNT.
The onus was put on XY to litigate that Mr. Zhu controlled GNT, which caused lengthy delays in the case.
During the trial, IND employees testified that they didn't know who their actual employer was and that they were moved around between companies without knowledge or consent while keeping the same roles. They only knew they had been transferred when they received their paycheck from another company.
They regarded all the various companies involved as one group—the IND Group—all owned and controlled by Mr. Zhu. Employee testimony revealed that Mr. Zhu instructed an accounting manager in the IND Group to transfer money out of IND LifeTech Group Ltd to GNT’s account to "avoid execution by XY."
According to testimony from James Yunjian Yang—a former IND office manager from 1999 to 2014—several offshoot companies operated in the United States.
Mr. Yang was involved in developing businesses in California, Australia, and Uruguay. Specifically, in Uruguay, where Mr. Yang set up IND Lifetech Uruguay, Mr. Zhu asked him to be a director of this new company.
Mr. Yang asked for a secondary position, as he didn't want to take full responsibility, according to his testimony. As a result, a consultant, Edward Richard, agreed to be a shareholder. Mr. Yang, despite owning 95 percent of the company on paper, said he always considered Mr. Zhu the owner.
A 2016 ruling in Hong Kong revealed that although Mr. Zhu had never been a shareholder or director of GNT, he ultimately controlled the company. The ruling dismissed GNT's appeal against freezing its bank account to pay XY.
"The evidence reinforces a good arguable case that although Jesse Zhu has never been a director or shareholder of GNT, he controlled or owned GNT," the court document states.
"Although the various companies appear to have been set up for different purposes, they were, from Mr. Zhu’s point of view, interchangeable as his wishes dictated."
GNT's jurisdiction appeal was decided earlier this year, on May 16. A Hong Kong justice ruling to dismiss GNT’s appeal in favor of XY, which was reported as a rare win for a foreign plaintiff with no operations or assets in Hong Kong.
image-5513068
A search on the Vlex legal intelligence platform for "Jessie Jia Bei Zhu" returns 27 legal cases—19 in Canada, seven in Hong Kong, and one in the United States (Wisconsin).
A search for "Universal Meditech Inc." returned 132 legal cases in 10 countries—116 in the United States—while "Prestige Biotech" returned 53 cases in four countries, of which 31 are in the United States.
The Epoch Times contacted Prestige Biotech, Universal Meditech, Jesse Zhu, and Wang Zhaoyan for this article, but received no response.
The Epoch Times reached out to XY and its parent company, Sexing Technologies, but didn't receive a response by press time.
Back to Reedley
Recently, Universal Meditech—which had given over its biolab contents to Prestige Biotech—was set to move to a new location near the Fresno Yosemite International Airport, according to local media outlet GV Wire.
Ms. Harper, the City of Reedley code enforcer, said that after reports of the issues the city was having surfaced during the Reedley investigation, Fresno officials denied the proposal for the new location, and Universal's lease was canceled.
The FDA issued a warning on Aug. 11 regarding test kits manufactured by Universal Meditech, and on Aug. 31, Universal Meditech announced that it was going out of business and issued a recall of all its products, including the COVID-19 test kits.
Universal Meditech has announced that it was going out of business and issued a recall announcement of all its products. (U.S. Food and Drug Administration)
Universal Meditech has announced that it was going out of business and issued a recall announcement of all its products. (U.S. Food and Drug Administration)
On Sept. 13, the House Select Committee on the Chinese Communist Party issued its first-ever subpoena to gather evidence in its investigation into the Reedley biolab.
"It is deeply disturbing that a Chinese company set up a clandestine facility in small-town America that contained, per the CDC, ‘at least 20 potentially infectious agents’ like HIV and the deadliest known form of malaria," said Rep. Mike Gallagher (R-Wis.), chair of the committee.
Responding to the subpoena, Reedley officials turned over thousands of pages of documents, hundreds of photos, and hours of video.
The FBI replied to an Epoch Times inquiry about the investigation, saying: "The Reedley matter is being handled by local Fresno County officials. In keeping with long-standing policy, the FBI has neither confirmed nor denied any investigation and has not commented on this matter."
Ms. Harper said she's had a lot of sleepless nights since discovering the secret biolab.
"I'm sitting at home, and I'm thinking, 'Gosh, you know, this is happening here in Reedley, this could be happening all across the United States,'" she told The Epoch Times.
"It keeps you up at night, knowing that there's no one out there looking for these labs. And even if we do find them, a city or county could get frustrated to the point that they just tell them, 'OK, here's a notice, move out,' and then it just moves on to the next city."
