California tech CEO charged in coronavirus test fraud case

president of a Silicon Valley medical techlogy company was charged on Tuesday with misleing investors by falsely claiming company h developed a government-approved blood test for new coronavirus — first criminal securities fraud prosecution related to COVID-19 pandemic, federal officials said.

Mark Schena, president of Arrayit Corporation, was charged with one count of securities fraud and one count of conspiracy to commit health care fraud after authorities said his company billed Medicare $69 million for coronavirus and unnecessary allergy tests.

Schena did t immediately return a mess seeking comment.

Schena, 57, touted that company based in Sunnyvale h only laboratory in world that offered “revolutionary microarray techlogy” that allowed it to test for allergies and coronavirus with same finger-stick test kit, prosecutors said.

Beginning in 2018 and through February 2020, Schena and or employees paid bribes to recruiters and doctors to run an allergy screening test for 120 allergens ranging from stinging insects to food allergens on every patient, authorities said.

As coronavirus pandemic began to escalate, Schena, of Los Altos, instructed patient recruiters and clinics to d its test for coronavirus, prosecutors said.

He also is accused of publishing false claims on social media and in company emails to investors about Arrayit’s ability to provide accurate, fast, reliable and cheap coronavirus tests in compliance with state and federal regulations.

Schena told investigators he thought developing a test for coronavirus based on his allergy test would be simple, “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.”

Arrayit never disclosed that Food and Drug ministration informed it on April 17 that its COVID-19 test was t at an acceptable level of performance, federal prosecutors said.

company also claimed partnerships with Fortune 500 companies, government ncies and public institutions, without disclosing y were eir trivial or did t exist, federal prosecutors said.

Arrayit’s stock price more than doubled by mid-March, even as stock market was crashing, according to court documents.

“ allure of cheap reliable alternatives to today’s standard blood tests panels has captured imagination of health care industry, making such alternatives a prime subject for fraudsters,” said U.S. Attorney David L. Anderson of rrn District of California.