Since 2020, Chilivis Grubman attorneys have tracked and written about indictments, guilty verdicts, and prison sentences related to COVID-19 relief programs. CG attorneys have cautioned that no person, despite fame or title, is immune to the government’s efforts. The government’s enforcement of the CARES Act has involved individuals and businesses across the country, including NFL players, Reality TV stars, and even law enforcement personnel. Silicon Valley executives are not exempt and will be pursued by the government where fraud may exist, as CG attorneys previously discussed.
In September 2022, CG attorneys discussed the conviction of Mark Schena, the president of a Silicon Valley-based medical technology company. His conviction was a result of his involvement in schemes to defraud investors and commit healthcare fraud, including paying illegal kickbacks. The schemes led to the submission of over $77 million in fraudulent claims for COVID-19 and allergy testing. The U.S. Department of Justice (DOJ) press release announcing the conviction detailed the schemes that resulted in the conviction.
Investor Fraud
Mr. Schena, the president of Arrayit Corporation, claimed to investors he “invented revolutionary technology to test for virtually any disease using only a few drops of blood” and described himself as the “father of microarray technology” and a potential Nobel Prize recipient. Investors were falsely led to believe that Arrayit’s value could reach $4.5 billion. Mr. Schena, however, did not release Arrayit’s financial disclosures – as required by the Securities and Exchange Commission (SEC) – and concealed that Arrayit was on the verge of bankruptcy.
Health Care Fraud
According to the government, Mr. Schena falsely claimed that his company had a test for COVID-19 before he developed the test. After his test was developed, he was informed by the FDA that his COVID-19 test was inaccurate and could not receive Emergency Use Authorization for the United States. Despite the FDA’s communication, Mr. Schena claimed his test was more accurate than a PCR test. He also “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 ordered allergy screening tests on all patients for over one hundred allergens. According to the government, Mr. Schena also paid kickbacks to marketers. Arrayit billed Medicare excessively for allergy testing, making it one of the highest billing labs for this service in the United States.
The government also highlighted that “the Health Care Fraud Unit’s Data Analytics Team supported the prosecution.” Mr. Schena was convicted of conspiracy to commit health care fraud and conspiracy to commit wire fraud, health care fraud, conspiracy to pay kickbacks, payment of kickbacks, and securities fraud. On October 18, 2023, the DOJ announced that Mr. Schena was sentenced to eight years in prison and ordered to pay $24 million in restitution following his conviction in 2022.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with federal criminal and civil investigations, criminal and civil actions, and administrative actions. If you need assistance with such a matter, please contact us today.