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.
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.
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.
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.
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.
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.
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.
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.
