The president of a Silicon Valley-based medical technology company was sentenced to eight years in prison and ordered to pay $24 million in restitution for participating in a scheme to defraud investors and a scheme to commit health care fraud and pay illegal kickbacks in connection with the submission of over $77 million in claims for COVID-19 and allergy testing. A federal jury convicted Schena on Sept. 6, 2022
60 year old Mark Schena, who lives in Los Altos, California, served as the president of Arrayit Corporation. Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented a revolutionary technology to test for virtually any disease using a single drop of blood from a finger stick sample.
In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and that he was on the shortlist for the Nobel Prize. Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion.
Schena orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens regardless of medical necessity.
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.
The Health Care Fraud Unit’s Data Analytics Team supported the prosecution and, as the evidence at trial showed, Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States.
In early 2020, Schena falsely announced that Arrayit “had a test for COVID-19.” Schena told federal agents that it was simple to develop a test for COVID-19 because the switch from testing for allergies to testing for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.” Seeking to capitalize on the nationwide shortage of COVID-19 testing, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had mandated testing for COVID-19 and allergies at the same time, and required that patients receiving the Arrayit COVID-19 test also be tested for allergies. Schena also concealed from investors and patients 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.
In furtherance of the scheme, Schena failed to release Arrayit’s financial disclosures – as required by the Securities and Exchange Commission (SEC) – and concealed that Arrayit was on the verge of bankruptcy. Schena lulled investors who were concerned that the company was a “scam” by engaging in television appearances and filming videos that fraudulently portrayed the laboratory as busy and high-tech.
Schena also issued false press releases and public statements on social media 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. The press releases and statements falsely claimed that such entities had agreed to use the Arrayit technology, when in fact no such agreements existed or were of minimal value.