On September 2, 2022, the U.S. Department of Justice announced the conviction of Mark Schena of California.  Mr. Schena was the president of Arrayit Corporation, a Silicon Valley-based medical technology company.  According to the press release, Mr. Schena claimed to investors that he “invented revolutionary technology to test for virtually any disease using only a few drops of blood.”  He also described himself as the “father of microarray technology” and claimed that he was on the shortlist for a Nobel Prize.  Mr. Schena misrepresented the value of his company to investors by claiming that the company could be worth $4.5 billion.  In reality, the company was facing possible bankruptcy.  To reduce suspicion of claims that he was running a scam, he issued press releases and tweets falsely claiming that his company entered into lucrative partnerships with various entities, including the government. 

Besides misleading investors, the government also noted that Mr. Schena devised an illegal health care fraud scheme involving kickbacks and submitted false claims for medically unnecessary allergy tests.  As part of the scheme, Mr. Schena paid kickbacks to marketers and utilized a deceptive marketing plan that made false claims about his company’s technology.  When blood specimens were received, his company would run allergy screening tests on every patient for 120 allergens, regardless of medical necessity.  According to the DOJ, the evidence at Mr. Schena’s trial showed that “Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States.”

Mr. Schena was also convicted for conduct related to the COVID-19 pandemic.  According to the government, Mr. Schena falsely claimed that Arrayit had a test for COVID-19 before he developed such a test.  Once he developed a COVID-19 test, Mr. Schena claimed that his test was more accurate than a PCR test. According to the government, Mr. Schena made these claims despite being informed by the FDA that his COVID-19 test was not accurate enough to receive Emergency Use Authorization for use in the United States.  During the nationwide shortage of COVID-19 tests, Mr. Schena developed a 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 …”  He then required patients to receive the Arrayit COVID-19 test and be tested for allergies at the same time.  

Mr. Schena’s conviction includes one count of conspiracy to commit health care fraud and wire fraud (up to 20 years in prison); two counts of health care fraud (up to 10 years in prison for each count); two counts of payment of kickbacks (up to 10 years in prison for each count), one count of conspiracy to pay kickbacks (up to 5 years in prison); and three counts of securities fraud (up to 20 years in prison for each count).  Mr. Schena is scheduled for sentencing on January 30, 2023, and any sentence levied should consider federal Sentencing Guidelines and other statutory factors.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with federal criminal and civil investigations.  If you need assistance with such a matter, please contact us today.