Silicon Valley exec Mark Schena gets 8 years in prison for COVID-19, allergy testing fraud
SAN JOSE – A president of a Silicon Valley firm has been sentenced to federal prison after being convicted in a multi-million dollar scheme that involved fraudulent COVID-19 and allergy tests.
According to Northern California U.S. Attorney Ismail Ramsey's office, 60-year-old Mark Schena of Los Altos received an eight-year prison sentence and was ordered to pay $24 million in restitution. Schena, who served as president of Arrayit Corporation, was found guilty last year of multiple charges including conspiracy, health care fraud, illegal kickbacks and securities fraud.
Prosecutors said Schena defrauded investors by claiming he invented a revolutionary technology to test for virtually any disease using a single drop of blood from a finger stick sample. Schena and his publicist claimed to investors that Schena was the "father of microarray technology," that he was on the shortlist for the Nobel Prize and that Arrayit could be valued at $4.5 billion.
Schena failed to release the company's financial disclosures, prosecutors said, which revealed that the company was on the verge of bankruptcy.
Beginning in 2018, prosecutors said Schena orchestrated an illegal kickback scheme submitting fraudulent claims to Medicare and private insurance companies for unnecessary allergy testing. The company then ran allergy screening tests on every patient for 120 different allergens, regardless of medical necessity.
Prosecutors said Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the country.
During the early days of the COVID-19 pandemic in 2020, Schena announced that he had a test for the novel coronavirus, at a time when testing was hard to come by. The executive told federal agents that the switch from testing allergies to COVID-19 was "like a pastry chef" who switches from selling "strawberry pies" to selling "rhubarb and strawberry pies."
Prosecutors said Schena launched a deceptive marketing scheme that falsely claimed Dr. Anthony Fauci and other officials mandated testing for COVID-19 and allergies at the same time and required patients receiving his COVID-19 test to be tested for allergies.
More than $77 million in claims were submitted in claims for COVID-19 and allergy testing, according to prosecutors. Schena was indicted in June of 2020.
"He used the global pandemic as a backdrop to fuel a kickback scheme and a massive fraud upon investors and people searching for better health care during a time of great uncertainty," Ramsey said in a statement. "Even in times of national crisis, our office will ensure that Silicon Valley remains a place where innovation and ingenuity – and not fraud and deceit – fuel vibrant markets for investors and inventors."
According to prosecutors, the case against Schena was the first criminal securities fraud case related to the COVID-19 pandemic charged by the Justice Department and the first criminal COVID-19 health care fraud case brought to trial.
