The president of a Silicon Valley-based medical technology company was sentenced to eight years in prison and ordered to pay $24 million in restitution for participating in a scheme to defraud investors and a scheme to commit healthcare fraud and pay illegal kickbacks in connection with the submission of over $77 million in claims for COVID-19 and allergy testing. According to court documents, Mark Schena, 60, of Los Altos, California, was the president of Arrayit Corporation. Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented a revolutionary technology to test for virtually any disease using a single drop of blood from a finger stick sample. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and that he was on the shortlist for the Nobel Prize. Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion. In furtherance of the scheme, Schena failed to release Arrayit’s financial disclosures — as required by the Securities and Exchange Commission (SEC) — and concealed that Arrayit was on the verge of bankruptcy.
Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens regardless of medical necessity. To obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test. The Health Care Fraud Unit’s Data Analytics Team supported the prosecution and, as the evidence at trial showed, Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States.
