A Chinese-backed biolab in California was awarded over half a million dollars in US taxpayer cash, records show.
The black market lab – which was raided earlier this year – was found to be making illegal Covid and pregnancy tests and storing disease-riddled mice and hundreds of samples of pathogens, blood, and other dubious chemicals.
Public records show that the company linked to the lab received nearly $150,000 from the US government under a Covid-era loan program, receiving two separate loans of $74,912 in April 2020 and February 2021.
Universal Meditech was also awarded a massive $360,000 tax credit in 2018 through California Gov. Gavin Newsom’s CalCompetes program – though UMI’s inability to meet program guidelines meant it never actually received those funds.
The company – which was based in Fresno, California, went bust in 2022 and was taken over by its main creditor, a company with Chinese owners who moved the operation into an unassuming warehouse in the sleepy town of Reedley.
Investigators from Fresno County, the City of Reedley, and the Centers for Disease Control and Prevention found containers of plasma and blood of unknown origin and for unknown purposes
Among hundreds of vials of infectious viruses and bacteria, many of which were stored improperly in shoddy freezers, were samples of malaria, shown here, alongside Chinese characters. Other infectious agents found included strains of the herpes virus, the bacterium that causes meningitis, chlamydia, Covid-19, and HIV
UMI had been operating legally prior to its closure, with its Fresno facility properly licensed and permitted from the state to produce pregnancy, ovulation, and menopause diagnostic tests.
While it had received the federal money as a legal company, a subsequent move by regulators to put
In December 2022, the Food and Drug Administration, which must issue pre-market approval for diagnostic tests, recalled approximately 56,000 of UMI’s Covid tests in California and Texas, citing the company’s lack of pre-market approval from the agency.
The recall did not mention the pregnancy tests.
Ultimately, UMI was unable to recover from the recall. That, along with a small fire at its facility in Fresno, California and an eviction threat in the fall of 2022, led UMI to declare bankruptcy. UMI was then acquired by Prestige Biotech.
Prestige took over all assets – including hundreds of haphazardly stored vials of disease-causing viruses and bacteria — and moved them to a warehouse in Reedley, California around December 2022.
Shortly after that in late 2022, the black-market lab was brought to the attention of officials when a code enforcement officer noticed a garden hose sticking out of a building where it shouldn’t have been.
This observation kicked off a state, local, and federal probe in March — one that Reedley city manager Nicole Zieba had never seen before.
Ms Zieba said: ‘This is an unusual situation. I’ve been in government for 25 years. I’ve never seen anything like this.’
A warrant issued in early March 2023 allowed Reedley officials to search the nondescript building at 850 I street, where they found hundreds of vials containing biomaterials, including blood and tissue, as well as other unlabeled chemicals.
Some vials contained chlamydia, E. coli, streptococcus pneumonia, hepatitis b and c, herpes 1 and 5, rubella, and malaria. and it appeared the biological waste produced at the site was discarded in a way that violated the safe removal protocols required in the state medical waste management act.
Officials also found nearly 1,000 dead and dying mice that had been genetically modified to catch and spread covid.
To date, city officials have removed more than 5,000 gallons of biological waste from the site over three separate instances.
UMI, which was operating legally at the time, received nearly $150,000 from the federal government. But it was later found to have been unlawfully producing and distributing Covid tests
UMI also received a massive tax break of $360,000 from the state, though California officials say that money was never given to UMI
Prior to the discovery of UMI’s shady dealings, California awarded the company a $360,000 tax credit in 2018 as part of the state’s CalCompetes program which provides tax incentives to businesses like UMI in order to encourage job creation and economic growth within the state.
However, UMI was never able to claim it, according to Heather Purcell, communications head for the California Governor’s Office of Business and Economic Development.
Under CalCompetes guidelines, companies are required to honor a five-year agreement with the state promising to meet annual job creation and financial targets.
Ms Purcell said: ‘Universal Meditech did not end up receiving any funding through CalCompetes tax credits’.
It is not clear exactly when the credit was recaptured by the state but the five-year term has expired, and according to Ms Purcell, ‘UMI did not achieve any of its milestones and was not approved to claim any of the tax credits’.
In 2019, the same year that the tax credit was granted, the Fresno County Real Estate Forecast applauded UMI for ‘leveraging this growing demand’ for in vitro diagnostic products like pregnancy tests ‘to produce high-quality, low-cost products which can be sold worldwide.’
State-issued tax breaks were not the only financial incentive teed up for UMI.
Records from the Paycheck Protection Program, a federal program established during the pandemic to help businesses amid economic turmoil, revealed that UMI received two PPP loans.
These loans were an integral part of the program because they helped businesses keep workers and cover other eligible expenses. In its first petition for a loan in 2020, UMI listed its industry as ‘In-Vitro Diagnostic Substance Manufacturing’ where it employed 15 people.
In its second request for a PPP loan in 2021, UMI billed itself as part of the Surgical and Medical Instrument Manufacturing’ industry where it employed 13, slightly fewer people than the year prior.
The loans were forgivable if the borrower used at least 60 per cent for payroll costs and the rest for other necessary expenses such as rent, mortgage interest, or utilities.
As a recipient of the loans, UMI made pregnancy, ovulation, and Covid diagnostic tests, the latter of which were later recalled.
The nondescript warehouse was identified by a code enforcement officer in December 2022 who happened to be passing by when they saw a garden hose located where it should not have been
A search warrant issued less than three weeks later revealed hundreds of vials of improperly labeled chemicals and biohazards, including what ended up being stored coronaviruses, herpes viruses, hepatitis, and malaria, in addition to about 1,000 dead or dying lab mice
The recall affected UMI’s lots of Covid tests as far back as October 2021, though it is not known when UMI began making them.
However, the timing of the first loan in April 2020 suggests UMI had begun manufacturing Covid tests or at least had plans to start.
Additionally, some of the pregnancy tests were found in the illegal Reedley lab in July, suggesting UMI had continued making them.
The recall of just over 56,000 unregulated Covid tests was not initiated until late December 2022, meaning that more could have been unlawfully produced and dispersed, providing that many Americans or potentially more people with inaccurate results. In the worst-case scenario, the tests from that facility could have exposed at least that many people to trace amounts of a pathogen stored at the lab that found its way onto the surface of the test or its packaging.
The origins of Prestige Biotech, which had jurisdiction over the hundreds of chemicals, viruses, and biological materials, as well as the mistreated animals and faulty equipment, are still being unraveled, but its owners reported to county officials that they lived in China.
Prestige Biotech is still under investigation by local officials and it is unclear whether and to what extent officials representing the new, Chinese-linked company were also part of UMI.
June correspondence between Assistant Director of the Fresno County Department of Public Health Joe Prado and a man named David He who purported to be a ‘representative’ of Prestige Biotech who was ‘authorized to manage and deal with the related work of 850 [I street] temporary warehouse for Prestige and now-defunct UMI, shows county and city officials struggling to get answers about the people behind the illicit lab.
Prado wrote to He: ‘First you responded with the addresses of empty offices, and when we asked for clarification you provided addresses in China that do not appear to correlate with any maps of the area. The Department is trying to work with you but it is increasingly difficult when it appears that you are not wanting to provide real information’.
It was one example of several separate instances in which Mr Prado and other local officials pressed for explanations from those in the facility only to be met with resistance and misinformation.
A DailyMail.com request to speak with Gov Newsom regarding the Reedley lab was referred to the state’s public health authority, which declined to comment on an ongoing investigation.
The Food and Drug Administration, which has jurisdiction over all medical devices such as diagnostic tests, also declined to comment on the record about the ongoing investigation into the illicit lab and the contents within it.
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