COVID-19 testing lab owner pleads guilty to $14 million fraud scheme

CHICAGO (CBS) -- The co-owner of a Chicago COVID-19 testing laboratory has pleaded guilty to a $14 million fraud scheme in which his company provided fake negative results to people who had been tested and billed the federal government for the tests.

Zishan Alvi, 45, of Inverness, pleaded guilty on Monday to one count of wire fraud, and faces up to 20 years in prison when he is sentenced in February.

Alvi was indicted in March 2023 , more than a year after the FBI raided the headquarters of his company, LabElite , in the Norwood Park neighborhood.

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

In a plea deal with federal prosecutors, Alvi admitted that between February 2021 and February 2022, his company billed the federal government $14 million for more than 85,000 COVID-19 tests that were never processed.

LabElite also told people who had undergone COVID-19 tests that their results were negative even when their tests had not been processed. Some of those patients who were told they had tested negative got other tests at separate labs while waiting for results from LabElite, and learned they were, in fact, positive for COVID-19.

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.

Alvi transferred the money LabElite got from the federal government from the company's bank account to his own personal accounts, and used some of the funds to buy luxury cars.

Alvi directed LabElite employees to claim falsely that COVID tests had been performed when specimens were actually thrown away without ever being tested, 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.