Inverness man indicted for COVID-19 testing fraud scheme

A suburban man has been indicted by a federal grand jury on 10 counts of wire fraud and one count of theft of government funds for his involvement in a COVID-19 testing fraud scheme that netted his Chicago-based laboratory over $83 million from a federal pandemic relief program.

The money was allegedly obtained by submitting fraudulent claims for reimbursement on tests that were never performed, that were performed incorrectly or that were paid for by clients.

Zishan Alvi, 44, of Inverness, was arrested last week for his alleged involvement in the scheme. He pleaded not guilty to the indictment at his initial appearance on Friday, court records show. Alvi appeared for a detention hearing Monday at the Dirksen U.S. Courthouse, where he was ordered released on a $2 million bond secured by property, according to court records.

Alvi co-owned and operated Laboratory A in Chicago, which purportedly performed two types of tests to detect COVID-19: PCR tests and "rapid" antigen tests that delivered results within approximately 15 minutes. Individuals and companies could also pay a fee for expedited PCR test results in Laboratory A.

According to the indictment, which was made public Monday, in or around December 2020, Laboratory A enrolled in the Health Resources and Services Administration's Uninsured Program. The agency's program used funds appropriated through federal legislation in order to cover the costs of COVID-19 tests for people without health insurance coverage.

Between February 2021 and February 2022, Alvi and others allegedly participated in a scheme by which Laboratory A submitted fraudulent claims seeking reimbursement for COVID-19 tests with the knowledge that: the laboratory had not performed a test; that the laboratory had modified a test, thus making the results unreliable; or that the laboratory had already been paid by clients who had purportedly been tested.

According to the indictment, Alvi directed Laboratory A employees to falsely report that COVID-19 tests had been performed on clients despite knowing that the test specimens had been thrown out, without being tested, at his direction. The laboratory would give negative test results to individuals who had provided specimens for testing. Laboratory A also did not release positive COVID-19 results on specimens where tests were eventually performed, since a negative result had already been released, according to the indictment.

The indictment also indicated that Alvi directed employees to alter the laboratory's testing methods by using less of the materials needed to process PCR tests -- including the reagents -- in order to reduce costs and increase profits, despite knowing that would make test results unreliable.

Alvi allegedly transferred part of the $83 million which Laboratory A obtained from HRSA -- from the laboratory's accounts to a personal account. He then allegedly used the money for personal expenditures, including vehicle purchases and investments in stocks and cryptocurrency. According to a news release Monday, the indictment seeks forfeiture from the defendant of over $6.8 million in alleged ill-gotten gains, in addition to five luxury vehicles and funds from other trade and investment accounts.

Each count of wire fraud Alvi faces is punishable by a maximum of 20 years in federal prison, and the count of theft of government funds is punishable by up to 10 years in federal prison.

"The charges in this case allege that the defendant disregarded public health concerns in favor of personal financial gain," said Morris Pasqual, acting U.S. attorney for the Northern District of Illinois, in a news release. "Doing so by compromising taxpayer-funded programs intended to fight the spread of coronavirus was particularly reprehensible."

Chicago Tribune's Jason Meisner contributed.

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