California Biotech Executive Guilty in $77 Million Blood Test Scheme

A biotech executive in California was convicted Thursday of orchestrating a $77 million scheme involving false and fraudulent claims for allergy and Covid-19 tests, federal prosecutors said.

The executive, Mark Schena, 59, served as president of Arrayit Corporation, a biomedical company that claimed to have invented technology to detect any disease using just a drop of blood pricked on a finger. According to Arrayit’s website, its “microarray” technology could detect ovarian cancer, Parkinson’s disease, colon cancer and male fertility, among other diseases and conditions.

Mr. Schena was convicted of a total of nine federal charges, including conspiracy to commit health care and wire fraud and three counts of securities fraud. He faces up to 20 years in prison for conspiracy to commit health care fraud and conspiracy to commit wire fraud, as well as 20 years for each count of securities fraud.

Starting in 2018, Schena paid recruiters and doctors kickbacks and kickbacks to conduct allergy tests for 120 different allergens, including wasp stings, shrimp, peanuts, dairy and Bermuda grass, regardless of medical necessity, federal prosecutors said.

The US Department of Justice said it then developed “a misleading marketing scheme” that falsely promoted the accuracy of the test “when, in fact, it was not a diagnostic test.”

According to the department, Mr. Schena submitted fraudulent claims to Medicare and private insurance for unnecessary allergy testing. The company billed Medicare more per patient for allergy blood tests than any other laboratory in the United States, the Justice Department said. Some commercial insurers were billed more than $10,000 per test.

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When Arrayit’s allergy testing business failed during the coronavirus pandemic, the company turned to Covid-19 testing, claiming to have developed a blood-based test using its purported technology.

Because Arrayit falsely claimed that its Covid test was more accurate than a PCR test, Mr. Schena was informed by the US Food and Drug Administration that the Arrayit test was not accurate enough to receive a clearance. emergency use. Schena hid that rejection from investors.

Mr. Schena described himself to investors as “the father of microarray technology” and falsely declared that he was on the shortlist for the Nobel Prize, the Justice Department said.

A company phone number has been disconnected. An attorney for Schena, Todd A. Pickles, declined to comment Friday.

Arrayit has compared itself to failed blood testing startup Theranos at least once on its Facebook page, writing that its technology can use blood droplets “that are 250,000 times smaller than the volume of Theranos nanocontainer.” “, according to the initial complaint from the Department of Justice in 2020.

Elizabeth Holmes, the founder of Theranos, who once promised to revolutionize health care through a simple blood test, and Ramesh Balwani, the company’s former top executive, have been accused of overstating the capabilities of their machines. blood test to attract investors. and clients

In January, Ms. Holmes was convicted of four counts of fraud and in July, Mr. Balwani was found guilty of 12 counts of fraud.

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