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Co-owner of LabElite COVID testing company indicted on fraud charges

11 charges filed against co-owner of LabElite COVID testing lab
11 charges filed against co-owner of LabElite COVID testing lab 00:40

CHICAGO (CBS) -- The co-owner of a COVID-19 testing has been indicted on fraud charges.

On Thursday of last week, a grand jury handed down the indictment against Zishan Alvi, 44, of Inverness. Alvi was co-owner and operator of LabElite.

CBS 2 was there when the FBI raided LabElite's headquarters at 5824 N. Northwest Hwy. in the Old Norwood Park community in February of last year.

LabElite offered both PCR and rapid COVID-19 tests to consumers at storefronts locations beginning in late 2020.

The indictment said Alvi and LabElite fraudulently billed the Health Resources and Services Administration's Uninsured Program for reimbursement for COVID-19 tests. The U.S. Department of Health and Human Services program provided COVID testing for free for people who did not have health insurance.

In total, LabElite obtained more than $83 million from the program for COVID tests they purportedly performed, prosecutors said.

The indictment said Alvi and LabElite submitted reimbursement claims to the program for purported COVID-19 tests that were not really performed at all, had been modified such that they were unreliable, or for which the company had already been paid directly by consumers.

Alvi directed LabElite employees to claim falsely that COVID tests had been performed when specimens were actually thrown away without ever being tests, and also to release purported negative results to consumers who had come in for COVID tests – but had never really had their specimens tested, prosecutors said.

In some instances, LabElite employees altered the testing method in a corner-cutting effort intended to cut costs and increase profits, prosecutors said. They used less of the materials need for PCR tests – including reagents – knowing full well that this would make the tests unreliable, prosecutors said. These tests were also submitted to the federal program for reimbursement, prosecutors said.

To conceal the unreliable test results, LabElite told the consumers they were negative, prosecutors said.

"The charges in this case allege that the defendant disregarded public health concerns in favor of personal financial gain. Doing so by compromising taxpayer-funded programs intended to fight the spread of coronavirus was particularly reprehensible" Acting U.S. Attorney Morris Pasqual said in a news release.  "I commend the work of our law enforcement partners who investigated this complex fraud scheme. Our office will relentlessly continue to bring to justice those who defrauded the government's pandemic relief initiatives."

Alvi is charged with 10 counts of wire fraud and one count of theft of government funds in the alleged scheme. If convicted, he will have to hand over five luxury cars – a Mercedes Benz, a Range Rover, a Lamborghini Urus, a Bentley, and a Tesla X.

Each count of wire fraud also carries a maximum of 20 years in prison, and the count of theft of government funds carries a maximum penalty of 10 years.

HRSA Uninsured Program – provided COVID-19 testing for people whom COVID testing was not covered by health insurance. Agency of U.S. Dept. health and human services.

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