Tech CEO Convicted in COVID-19 Allergy Test Fraud Case

SAN FRANCISCO (AP) — A Silicon Valley executive who prosecutors said lied to investors about inventing technology that tested for allergies and COVID-19 using just a few drops of blood and charged up to $10,000 per allergy test has pleaded guilty for health care fraud. authorities announced Friday.

A federal jury on Thursday convicted Mark Schena, of Los Altos, Calif., of bribing doctors and defrauding the government after his company billed Medicare for $77 million for fraudulent coronavirus and allergy tests, the U.S. Department of Justice said in a statement.

Schena, 59, claimed his company, Arrayit Corporation, based in Sunnyvale, California, had the only lab in the world that offered “revolutionary microarray technology” that allowed him to test for allergies and the coronavirus with the same kit finger stick tests. he said.

Alexandra Block, an attorney representing Schena, did not immediately return a phone message Friday seeking comment.

The case against Schena bore similarities to a more prominent legal saga surrounding former Silicon Valley star Elizabeth Holmes, who dropped out of Stanford University in 2003 to found a company called Theranos that promised to bring revolutionizing healthcare with a technology that could scan hundreds of diseases and other issues with just a few drops of blood, too.

As CEO of Theranos, Holmes went on to raise nearly $1 billion from successful business leaders such as Oracle founder Larry Ellison and media mogul Rupert Murdoch. Holmes, now 38, was convicted of four felony counts of defrauding investors in January after a nearly four-month trial in the same San Jose, Calif., courtroom where Senna’s trial was held.

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

The two cases briefly crossed paths Thursday morning when the jury deliberating in Schena’s trial sent three questions to the judge, causing an hour-long delay in the hearing on Holmes’ unsuccessful attempt to overturn the jury’s conviction against her.

Prosecutors said that after Arrayit’s allergy-testing business declined in 2020 amid the pandemic, Schena falsely announced that his company was testing for COVID-19 based on its blood-testing technology before it was even developed. After his company submitted it to the Food and Drug Administration, he failed to disclose that the FDA concluded the test was not accurate enough to be approved for emergency use, prosecutors said.

“Schena orchestrated a deceptive marketing scheme falsely claiming that Dr. Anthony Fauci and other prominent government officials had mandated simultaneous testing for COVID-19 and allergies and required patients receiving the Arrayit COVID-19 test to also be tested for allergies. ” they said.

Arrayit’s stock price more than doubled by mid-March 2020, even as the stock market crashed, according to court documents.

Schena also failed to release Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the brink of bankruptcy, prosecutors said. The case against him was the first securities fraud prosecution related to the COVID-19 pandemic, they said.

Before the pandemic, from 2018 to February 2020, Schena and other employees bribed recruiters and doctors to perform allergy tests for 120 allergens, from stinging insects to food allergens, on every patient, whether they needed it or not, they said. the authorities.

“Arrayit billed more per Medicare patient for blood-based allergy testing than any other laboratory in the United States and billed some commercial insurance companies over $10,000 per test,” they said.

Schena was convicted of one count of conspiracy to commit health care fraud and one count of conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay kickbacks, two counts of kickbacks and three counts of securities fraud.

He faces up to 20 years in prison on Jan. 30.

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Associated Press technology writer Michael Liedtke contributed to this story from San Ramon, California.

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