The DOJ announced that Jason Nielsen, a shareholder of Arrayit Corporation, pleaded guilty to one count of securities fraud for his role in manipulating the company’s stock prices to defraud investors. Arrayit is a California-based biotech company that provides innovative medical devices including healthcare testing. Nielsen, of Scotts Valley, admitted that he engaged in “spoofing” and “scalping” from approximately 2019 through April 2020.
According to court documents, Nielsen manipulated the price of Arrayit securities by posting misleading information on online message boards to induce investors to purchase securities and increase Arrayit’s stock prices. In addition to the foregoing practice, known as “scalping”, Nielsen also admitted that he engaged in “spoofing” by placing and canceling orders to buy Arrayit stock which misled the public and shareholders to believe there was a demand for Arrayit securities. As Nielsen engaged in scalping and spoofing, he sold his shares at an inflated price.
Nielsen is not the first individual accused of illegal activity in connection with Arrayit. In May 2021, the DOJ announced that a federal grand jury handed down a superseding indictment against Arrayit’s president, Mark Schena. It is alleged that Schena submitted over $70 million in false claims for allergy and COVID-19 testing. According to the superseding indictment, he also engaged in a scheme to defraud Arrayit’s investors by artificially inflating the share prices of Arrayit securities and exaggerating the company’s status and influence. Schena allegedly claimed that their laboratory was the “only laboratory in the world” that offered microarray technology allowing Arrayit to test for allergies and COVID-19 with a drop of blood 250,000 times smaller than what was required for Theranos’ technology. Schena also touted partnerships with Fortune 500 companies that did not exist.
There was also criminal information filed against Arrayit’s Vice President of Marketing, Paul Haje, and president of an Arizona-based marketing organization, Marc Jablonski, in connection to Schena’s alleged schemes. It is alleged that Haje conspired with Schena to solicit and pay kickbacks for inducing and ordering medically unnecessary allergy testing. It is further alleged that Haje caused fraudulent claims to be submitted to several insurers including Medicare and Medicaid. Similarly, it is alleged that Jablonski solicited and received kickbacks and bribes in exchange for ordering allergy testing and using Arrayit’s technology. The DOJ estimates that nearly $143 million in false billing were generated in connection with the foregoing schemes.
Nielsen is scheduled to be sentenced on October 24, 2022, and he faces a maximum of five years in prison. Schena has been charged with conspiracy to commit health care fraud and wire fraud, conspiracy to pay illegal kickbacks, payment of illegal kickbacks, and securities fraud. Haje and Jablonski were charged with conspiracy to defraud the United States and pay and receive kickbacks, and Haje was also charged with conspiracy to commit health care fraud. If found guilty of all charges, Schena faces up to 65 years in prison, Haje faces up to 25 years in prison, and Jablonski faces up to 5 years.
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