Medical Technology Company Chairman Convicted in $77 Million COVID-19 and Allergy Testing Scheme | takeover bid

A federal jury yesterday convicted the president of a Silicon Valley-based medical technology company for participating in a scheme to mislead investors, commit health care fraud and pay illegal bribes in connection with filing more than $77 million in false and fraudulent claims for COVID -19 and allergy tests.

Mark Schena, 59, of Los Altos, California, served as president of Arrayit Corporation. According to court documents and evidence presented at trial, Schena participated in a scheme to defraud Arrayit investors by claiming that he had invented a revolutionary technology to detect virtually any disease using just a few drops of blood. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and falsely claimed that he was shortlisted for the Nobel Prize. Evidence at trial showed that Schena also falsely stated to investors that Arrayit could be valued at $4.5 billion based on purported revenues of $80 million per year.

In support of the scheme, evidence at trial showed that Schena, among other things, failed to disclose Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the verge of bankruptcy. Schena reassured investors who were concerned the company was a “scam” by inviting them to private meetings and publishing false press releases and tweets claiming Arrayit had entered into lucrative partnerships with companies, government agencies and public institutions, including a hospital. child care and a major California health care provider. Tweets and press releases falsely claimed that such entities had agreed to use Arrayit technology, when in fact no such agreements existed or had minimal value.

Schena also orchestrated an illegal health care fraud and bribery scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit allergy tested each patient for 120 different allergens (from wasp stings to cod), regardless of medical necessity. To obtain blood samples from patients, Schena paid bribes to vendors in violation of the Recovery Kickbacks Elimination Act and orchestrated a deceptive marketing scheme that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when in fact it wasn’t. a diagnostic test. Arrayit billed Medicare more per patient for blood-based allergy tests than any other laboratory in the United States, evidence at trial showed, and billed some commercial insurers for more than $10,000 per test.

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In early 2020, Arrayit’s allergy testing business declined as the COVID-19 pandemic and stay-at-home orders reduced demand for allergy testing. Schena then falsely advertised that Arrayit “had a test for COVID-19” based on Arrayit’s blood testing technology, prior to developing such a test. Seeking to capitalize on a national shortage of COVID-19 tests, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had ordered COVID-19 and allergy tests at the same time and required that patients who receive the Arrayit COVID-19 test are also tested for allergies. Schena also falsely claimed that the Arrayit COVID-19 test was more accurate than a PCR test in diagnosing COVID-19 infections, while concealing from investors and patients who underwent the test that the Food and Drug Administration had informed him that the Arrayit test was not accurate. enough to receive an emergency use authorization for use in the United States.

Schena was convicted of one count of conspiracy to commit health care fraud and conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay bribes, two counts of paying bribes and three counts of securities fraud. . He is scheduled to be sentenced on January 30, 2023 and faces a maximum sentence of 20 years in prison for conspiracy to commit health care fraud and conspiracy to commit wire fraud; 10 years in prison for each count of health care fraud; five years in prison for concert to pay bribes; 10 years in prison for each count of paying bribes; and 20 years in prison for each count of securities fraud. Federal District Judge Edward J. Davila will determine any sentence after considering US Sentencing Guidelines and other legal factors.

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Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; US Attorney Stephanie M. Hinds for the Northern District of California; Special Agent in Charge Craig D. Fair of the San Francisco FBI Field Office; Acting Special Agent in Charge Steven J. Ryan of the US Department of Health and Human Services Office of Inspector General (HHS-OIG); Inspector in Charge Delany De León-Colón of the United States Postal Inspection Service (USPIS) – Criminal Investigations Group; Special Agent in Charge Kim R. Lampkins of the Veterans Affairs Office of Inspector General (VA-OIG); and Special Agent in Charge Bryan D. Denny of the Defense Criminal Investigative Service (DCIS) Western Field Office made the announcement.

The HHS-OIG San Francisco Regional Office and the Detroit Regional Office, USPIS, the FBI, VA-OIG and DCIS investigated the case.

Acting Deputy Director Jacob Foster and Trial Attorney Laura Connelly of the Justice Department’s Fraud Section and Assistant United States Attorney Christina Liu for the Northern District of California are prosecuting the case.

The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions can contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance hotline at 1-888-549-3945 or by emailing [email protected] gov. For more information on victims’ rights, visit: https://www.justice.gov/criminal-vns/victim-rights- Derechos-de-las-v-ctimas. If you believe you are a victim who has invested in Arrayit, or if you have taken a COVID-19 test prepared or marketed by Arrayit, please visit https://www.justice.gov/criminal-vns/case/Arrayit.

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