Silicon Valley Biotech Prez Convicted In $77M COVID Scam: DOJ

SANTA CLARA COUNTY, CA — A Silicon Valley biotech leader was convicted last week in federal court in connection with a $77 million COVID-19 and allergy testing scam, the Department of Justice said in a news release.

Mark Schena, 59 of Los Altos, 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 kickbacks, two counts of payment of kickbacks, and three counts of securities fraud, the DOJ said.

Schena is scheduled to be sentenced Jan. 30.

He faces a maximum penalty of 65 years, the DOJ said.

Schena, who served as the president of Arrayit Corporation, engaged in a scheme to defraud investors by claiming that he had invented revolutionary technology to test for virtually any disease using only a few drops of blood, the DOJ said.

In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and falsely stated that he was on the shortlist for the Nobel Prize, according to the DOJ.

Evidence at trial showed that Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion based on purported revenues of $80 million per year, the DOJ said.

Schena had failed to release Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the verge of bankruptcy, and lulled investors concerned the company was a “scam” by inviting them to private meetings and issuing false press releases and tweets, the DOJ said.

The press releases and tweets stated that Arrayit had entered into lucrative partnerships with companies, government agencies, and public institutions, including a children’s hospital and a major California health care provider, when in fact no such agreements existed or were of minimal value, the DOJ said.

Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing, according to the DOJ.

Arrayit ran allergy screening tests on every patient for 120 different allergens (ranging from hornet stings to codfish) regardless of medical necessity.

In order to obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test.

Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States, the evidence at trial showed, and billed some commercial insurers over $10,000 per test.