Tech CEO convicted in COVID-19, allergy test fraud case

SAN FRANCISCO — A Silicon Valley executive who prosecutors stated lied to buyers about inventing technological innovation that analyzed for allergies and COVID-19 using only a several drops of blood and billed up to $10,000 for each allergy exam was observed responsible of wellness treatment fraud, authorities announced Friday.

A federal jury on Thursday convicted Mark Schena, of Los Altos, California, of shelling out bribes to medical professionals and defrauding the government immediately after his business billed Medicare $77 million for fraudulent coronavirus and allergy checks, the U.S. Section of Justice said in a statement.

Schena, 59, claimed his Sunnyvale, California-based organization, Arrayit Corporation, had the only laboratory in the world that presented “revolutionary microarray technology” that allowed it to test for allergic reactions and the coronavirus with the same finger-adhere examination package, prosecutors said.

Alexandra Block, an legal professional symbolizing Schena, did not instantly return a cellphone message Friday seeking remark.

The scenario from Schena shared similarities with a extra outstanding authorized saga surrounding former Silicon Valley star Elizabeth Holmes, who dropped out of Stanford College in 2003 to observed a company named Theranos that she pledged would revolutionize health treatment with a technology that could scan for hundreds of illnesses and other concerns with just a number of drops of blood, much too.

As Theranos’ CEO, Holmes went on to increase just about $1 billion from thriving company leaders these as Oracle founder Larry Ellison and media mogul Rupert Murdoch. Holmes, now 38, was convicted on 4 felony counts of investor fraud in January subsequent a just about 4-month trial in the identical San Jose, California, courtroom exactly where Schena’s demo was held.

Holmes faces up to 20 yrs in prison at her Oct. 17 sentencing.

The two situations intersected briefly Thursday morning when the jury deliberating in Schena’s demo sent three concerns to the decide, triggering an hourlong delay in a hearing about Holmes’ unsuccessful try to overturn the jury’s conviction of her.

Prosecutors mentioned that following Arrayit’s allergy testing small business declined in 2020 amid the pandemic, Schena falsely introduced that his company had a take a look at for COVID-19 based on its blood testing engineering just before even acquiring it. Right after his corporation submitted it to the Food stuff and Drug Administration, he did not disclose that the Fda concluded the exam was not exact plenty of to be licensed for unexpected emergency use, prosecutors reported.

“Schena orchestrated a deceptive marketing and advertising plan that falsely claimed that Dr. Anthony Fauci and other outstanding governing administration officials experienced mandated testing for COVID-19 and allergic reactions at the exact same time and necessary that sufferers acquiring the Arrayit COVID-19 take a look at also be examined for allergy symptoms,” they mentioned.

Arrayit’s stock price tag more than doubled by mid-March 2020, even as the stock industry was crashing, in accordance to courtroom documents.

Schena also failed to launch Arrayit’s SEC-essential fiscal disclosures and hid that Arrayit was on the verge of personal bankruptcy, prosecutors said. The case in opposition to him was the to start with legal securities fraud prosecution linked to the COVID-19 pandemic, they mentioned.

Right before the pandemic, from 2018 through February 2020, Schena and other staff paid bribes to recruiters and doctors to run an allergy screening take a look at for 120 allergens ranging from stinging bugs to food stuff allergens on each individual individual whether they were required or not, authorities stated.

“Arrayit billed extra for each client to Medicare for blood-based mostly allergy screening than any other laboratory in the United States and billed some industrial insurers about $10,000 for every take a look at,” they said.

Schena was convicted of a single count of conspiracy to dedicate wellbeing care fraud and conspiracy to commit wire fraud, two counts of wellness care fraud, just one depend of conspiracy to pay back kickbacks, two counts of payment of kickbacks, and 3 counts of securities fraud.

He faces up to 20 a long time in jail at a Jan. 30 sentencing.


Affiliated Push Engineering Writer Michael Liedtke contributed to this story from San Ramon, California.