Mark Schena, former president of medtech company Arrayit Corp., on Oct. 18 was sentenced to eight years in prison and ordered to pay $24 million in restitution for defrauding investors and paying illegal kickbacks that resulted in the submission of more than $77 million in false claims for COVID-19 and allergy testing.
Four things to know:
1. Mr. Schena defrauded Arrayit's investors by claiming that he invented a new technology to test for any disease using a single drop of blood from a finger prick sample, according to the Justice Department. He also falsely claimed that he was on the shortlist for the Nobel Prize and that he Arrayit could be valued at $4.5 billion.
2. Prosecutors said Mr. Schena failed to release Arrayit's financial disclosures and concealed that the company was on the verge of bankruptcy. He engaged in television appearances that fraudulently portrayed the lab as busy and high-tech, and issued false news releases and social media statements stating that Arrayit had entered into partnerships with companies, government agencies and public institutions, including a children's hospital and a major California healthcare provider, according to court documents.
3. Mr. Schena also orchestrated an illegal kickback scheme that submitted false claims to Medicare and commercial payers for unnecessary allergy testing. He paid kickbacks to marketers to obtain patient blood specimens, with Arrayit running allergy screening tests on every patient for 120 different allergens regardless of medical necessity, according to the Justice Department. A deceptive marketing plan falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not actually a diagnostic test. Prosecutors said Arrayit billed more per patient to Medicare for blood-based allergy testing than any other lab in the U.S.
4. In early 2020, seeking to take advantage of the nationwide shortage of COVID-19 testing, Mr. Schena falsely announced that Arrayit developed a test for COVID-19, according to court documents. He orchestrated a marketing scheme that falsely claimed that Anthony Fauci, MD, and other government officials 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. The FDA also informed Mr. Schena that the Arrayit test was not accurate enough to receive an emergency use authorization — something which he also hid from patients and investors, according to the Justice Department.