Operators of illicit lab seek $50M from Fresno County, Reedley over seizure, cleanup

Tim Sheehan
·6 min read
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The company behind a clandestine biological lab in Reedley has lodged multimillion-dollar claims against the city of Reedley and the county of Fresno over the destruction of materials and mice that were allegedly being stored illegally inside a warehouse.

Universal Meditech Inc. — which was operating without a city business license in a large warehouse on I Street in downtown Reedley when it was shut down earlier this year — filed its claim with the city of Reedley this week, seeking $30 million to compensate for what the company’s attorney called a “huge financial loss of assets” from the “unlawful seizure by city officials” of its property.

A claim against Fresno County for more than $50 million was filed on Friday, accusing the county’s health department of wrongful seizure and destruction of more than 30 freezers and refrigerators containing biological assets.

Southern California attorney Stephen J. Thomas of the Thomas Business Law Group filed the claims on behalf of the company. The Fresno Bee reached out by phone to Thomas’ office in City of Industry to ask questions about the claims, but received no response as of 5 p.m. Tuesday.

Reedley, Fresno County respond to claims

“We are baffled,” Reedley City Manager Nicole Zieba told The Fresno Bee on Tuesday. “Everything we did was under court order. We even took criticism for moving so slowly, but we wanted to make sure we did everything carefully and legally.”

Fresno County spokesperson Sonja Dosti issued a statement that “the County believes there is no merit to the claim.”

“The abatement by the County and City has been conducted according to court order and all applicable legal processes.”

In the meantime, the city has issued its own demand letter to Universal Meditech and an associated company, Prestige BioTech Inc. — both companies whose owners hail from China — as well as the owner of the warehouse at 850 I Street, for payment of more than $310,000 to make up for the costs incurred so far by the city of Reedley and Fresno County for clearing out the biological materials, mice, chemicals, equipment and undistributed medical test kits found in the facility.

Universal Meditech’s claims for compensation

The claim asserts that after operating legally in Tulare and Fresno since 2015 into 2022, Universal Meditech was preparing to move from an industrial building at the south end of Fresno to a new building near Fresno Yosemite International Airport. But, Thomas wrote in documents accompanying both claims, a dispute with its landlord prompted the company to pull up roots before the new building was ready.

“Accordingly, UMI was forced to rent a temporary warehouse,” Thomas said. “After an urgent search, UMI finally rented 850 I St. in Reedley for half a year, and completed the move between Nov. 15th and 20th, 2022.”

The claims state that soon after the move, Reedley city officials “almost immediately … continued to check and harass” staff at the warehouse before “from March onwards, the temporary warehouse was completely sealed up.”

Collectively, Thomas wrote, agents from a collection of federal, state and county agencies “repeatedly carried out onerous inspections and investigations on the temporary warehouse.”

Among actions for which the company is seeking compensation are:

  • The euthanizing and disposal of about 1,000 purebred experimental mice that were discovered in the warehouse, including “dozens of experimental mice that are particularly resistant to tumor cells,” the claim states. Collectively, the claim estimates the value of the mice at about $700,000.

  • The destruction of thousands of frozen, monoclonal antibody cell lines, with a claimed overall value of more than $30 million.

  • Disposal of hundreds of genetically engineered recombinant strains of material for antigens related to ailments such as HIV, hepatitis, syphilis and malaria, and for genetically engineering pharmaceuticals such as insulin, interferon and others, which the claim states have a value of at least $10 million.

  • Seizure of other biological materials, antibodies, and chemical reagents with a collective claimed value of more than $21 million.

“The extent of the actual damage cannot be ascertained accurately at this time because UMI has been locked out of the warehouse,” according to the claim documents.

Claim says destruction of mice was ‘beyond the authority’

The claim does not address allegations by the city that the company was operating illegally without a business license inside the warehouse or that representatives of Universal Meditech and Prestige Biotech were evasive in their replies as city inspectors and county health officials sought to determine the extent of the operations and learn what was being stored in the warehouse.

But the claim asserts that the destruction of mice in April, carried out under an abatement warrant after declarations that they were being neglected and kept in overcrowded, unsanitary conditions, “went beyond the authority granted by the warrant.”

Additionally, Thomas wrote that Fresno County’s application in June for a court warrant to destroy biological materials stored in refrigerators and freezers on the basis that the warehouse contained viruses and bacteria that seriously endangered public health “was a lie.” The company, he added, was given only one day’s notice before the materials were destroyed, “and company representatives were not allowed to observe and collect evidence on site.”

The claim also complained about the short-circuiting of its planned relocation back to Fresno. The new factory building near the Fresno Yosemite International Airport has been built, but Thomas wrote that city officials have “delayed the approval because UMI/PBI will be the tenant.”

“The improper seizure and unauthorized law enforcement activities, as well as the resulting local public media, which published many false and distorted reports and information, led to the inability to carry out the relocation of the new factory building,” Thomas wrote. The landlord at the new building terminated the lease agreement with Universal Meditech and Prestige Biotech in August, he added.

New Fresno, Fresno County ordinances

As The Bee covered efforts by the city and county in August to clean up the warehouse site, it reached out by email to six different representatives and attorneys for Universal Meditech and Prestige Biotech for comment on the investigation, but received no response. The Bee also did not receive any complaints or request for correction from the company or its attorneys over its coverage.

In the wake of the shutdown of the Reedley lab, the city of Fresno subsequently passed an ordinance to regulate laboratories that deal with infectious diseases — including adding potential criminal penalties for those who violate the law. The ordinance received final approval from the Fresno City Council on a unanimous 7-0 vote on Oct. 5, and will take effect in early November.

County leaders say they, too, expect to enact an ordinance allowing the health department to conduct annual inspections of private labs.

The Chinese ownership of the two companies, coupled with revelations that the lab was reportedly dealing with COVID-19, raised concerns about possible connections between the lab and the Chinese government. The situation at the Reedley warehouse, described as “unprecedented” in the experience of state and federal regulators, has also given rise to investigations by two separate panels of the U.S. House of Representatives, including the Select Committee on the Chinese Communist Party.