Fresno County will receive a $125,000 settlement from the owner of the building where an illegal biological lab with links to China was discovered in Reedley.

The Fresno County Board of Supervisors voted 5-0 in closed session Tuesday to the settlement with AY-NC LP.

“This is over the owner’s responsibility for abatement costs at the Reedley lab,” county counsel Daniel Cederborg said.

Universal Meditech Inc., and its successor company Prestige Biotech, leased the space from AY-NC LP at 850 I St. in Reedley. When a Reedley code enforcement officer discovered a hose hanging out of the building, it sparked a months-long process to close down the lab.

The companies, as well as the man running lab, have links to China.

Both the county and the city of Reedley bore the responsibility of abatement costs. Reedley city manager Nicole Zieba said the city sent both the property owner and the lab company a $310,000 invoice.

The operator of the lab, Jia Bei Zhu. aka David He, aka Jesse Zhu, returns to federal court March 13. Zhu faces two counts of distribution of adulterated or misbranded medical devices and one count of making a false statement.

“The county will recoup a lot of the dollars that were expended in the cleanup effort. So I’m very pleased with that,” Supervisor Nathan Magsig said.

Lab Property Owner: We Are a Victim

Edmund Au-Yeung, whose family owns AY-NC LP based in Oakland, felt the settlement was fair.

“The money (that local government spent on the cleanup) is from the taxpayer. As a responsible person, our family decided to pay it first,” he said.

Au-Yeung said the lab tenant should have handled it, but the operator is in jail. He was concerned the county could place a lien on the property.

“We have no choice. We are a victim. We have to do it,” Au-Yeung said.

Zieba said AY-NC LP would have been entitled to a hearing regarding the invoice. The cost to conduct the hearing would have been $25,000 each for both the county and Reedley. That $50,000 was deducted from the $310,000 invoice, leaving Reedley’s share of the settlement at approximately $135,000.

“Part of me is still in shock that this occurred at all in the little city of Reedley. I’m almost glad that it did, in that we do things the right way. And we made sure that all of our taxpayers would be reimbursed, for the expenses it took to abate this property,” Zieba said.

Lab Found with Biologics, Mice

When news broke of the lab in June 2023, it made international news. A congressional inquiry examined the background of the lab.

A report from the House Select Committee on the Chinese Communist Party claimed Zhu received payments from the People’s Republic of China. His attorney, Tony Capozzi, denied those charges.

Local officials needed court orders to examine and later clean up the lab in the spring of 2023.

The biologics uncovered included COVID, HIV, and malaria. Also, 1,000 lab mice were found and had to be destroyed.

The federal EPA undertook another round of cleanup of lab chemicals earlier this month. Zieba says illicit pregnancy and COVID tests that remain will be removed by the state at a later time.

“At that point, the property owner will be able to determine what they wish to do with the property. I have a lot of people asking for the city to go in and demolish that building, and we don’t have a right to do so. The property owner still has a right to his property,” Zieba said.

The federal EPA will not seek reimbursement, Zieba said, because it was under the agency’s monetary threshold for cost recovery.

Read the Settlement Agreement