Tech CEO convicted in COVID-19, allergy test fraud case
SAN FRANCISCO –
A Silicon Valley executive who prosecutors say lied to investors about inventing COVID-19 and allergy testing technology that used just a few drops of blood and charged up to $10,000 per allergy test have been found guilty of healthcare fraud, authorities announced Friday.
A federal jury on Thursday convicted Mark Schena, of Los Altos, California, of giving bribes to doctors and deceiving the government after his company billed Medicare for $77 million for coronavirus and allergy testing fraud, the US Department of Justice said in a statement.
Schena, 59, claims Sunnyvale, California-based Arrayit Corporation has the only lab in the world to offer “revolutionary microarray technology” that enables allergy and coronavirus testing by same fingerstick test kits, prosecutors said.
Alexandra Block, an attorney representing Schena, did not immediately respond to a phone message on Friday seeking comment.
The lawsuit against Schena shares similarities with the more prominent legal story revolving around former Silicon Valley star Elizabeth Holmes, who dropped out of Stanford University in 2003 to start a company called Theranos, to which she committed The result will revolutionize healthcare with a technology that can scan hundreds of diseases and other problems with just a few drops of blood.
As CEO of Theranos, Holmes has gone on to raise nearly $1 billion from successful business leaders like Oracle founder Larry Ellison and media mogul Rupert Murdoch. Holmes, now 38, was convicted on four counts of investor fraud in January after a trial that lasted nearly four months in the same San Jose, California courtroom where the trial took place. Schena.
Holmes faces up to 20 years in prison following his October 17 sentencing.
The two cases briefly intersected on Thursday morning as the jury was debating in the trial Schena sent three questions to the judge, causing an hour-long delay in the hearing on the effort. Holmes’s unsuccessful attempt to overturn the jury’s conviction against her.
Prosecutors said that after Arrayit’s allergy testing business crashed in 2020 amid the pandemic, Schena falsely reported that his company was testing for COVID-19 based on the technology tested his blood before developing it. Prosecutors said that after his company filed it with the Food and Drug Administration, he failed to disclose that the FDA had concluded the test was not accurate enough to warrant emergency use. .
“Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr Anthony Fauci and other prominent government officials had ordered testing for COVID-19 and allergies and asked patients to comment. Arrayit COVID-19 testers must also be tested for allergies,” they said.
Arrayit’s share price more than doubled by mid-March 2020, even as the stock market was crashing, according to court documents.
Schena also failed to release financial information requested by Arrayit’s SEC and hid that Arrayit was on the verge of bankruptcy, prosecutors said. They said the case against him is the first securities fraud criminal prosecution related to the COVID-19 pandemic.
Before the pandemic, between 2018 and February 2020, Schena and other employees bribed employers and doctors to perform allergy screening tests for 120 allergens, from insects burns to food allergens on all patients, regardless of whether they are needed or not, authorities said.
“Arrayit bills each patient who comes to Medicare for blood-based allergy testing more than any other lab in the United States, and bills some commercial insurers over $10,000 per visit. testing,” they said.
Schena was found guilty of one count of health care fraud conspiracy and wire fraud conspiracy, two counts of healthcare fraud, one count of conspiracy to payback, two counts of kickbacks and three counts of fraud stock.
He faces 20 years in prison at his sentence on January 30.
Associated Press Technology writer Michael Liedtke contributed to this story from San Ramon, California.