California Biotech Govt Is Responsible in $77 Million Blood-Testing Scheme

A biotech executive in California was convicted Thursday of orchestrating a $77 million scheme of making false and fraudulent claims for Covid-19 and allergy testing, federal prosecutors said.

CEO, Mark Schena, 59, served as president of Arrayit Corporation, a biomedical company that claims to have invented technology to test for any disease by pricking just a drop of blood on your finger. According to Arrayit’s website, its “microarray” technology could test for ovarian cancer, Parkinson’s disease, colon cancer and male fertility, among others.

Mr. Schena was found guilty on a total of nine federal charges, including conspiracy to commit wire fraud and healthcare fraud and three counts of securities fraud. He faces up to 20 years in prison for conspiracy to commit healthcare fraud and conspiracy to commit wire fraud, and 20 years for each count of securities fraud.

Beginning in 2018, Mr. Schena paid kickbacks and bribes to recruiters and doctors to perform allergy testing for 120 different allergens, including hornet stings, shrimp, peanuts, dairy and Bermuda grass, regardless of medical necessity, federal prosecutors said.

The US Department of Justice said he then developed “a misleading marketing plan” that falsely promoted the test’s accuracy “when in reality it was not a diagnostic test.”

According to the department, Mr. Schena filed fraudulent claims with Medicare and private insurance companies for unnecessary allergy testing. The company billed Medicare more per patient for blood-based allergy testing than any other lab in the United States, the Justice Department said. Some commercial insurers have been billed more than $10,000 per test.

When Arrayit’s allergy testing business collapsed during the coronavirus pandemic, the company turned its attention to Covid-19 testing, claiming to have developed a blood-based test using its alleged technology.

Because Arrayit falsely claimed its Covid test was more accurate than a PCR test, the US Food and Drug Administration had told Mr Schena that Arrayit’s test was not accurate enough to receive an emergency use authorization. Mr. Schena kept this rejection secret from the investors.

Mr. Schena referred to investors as the “father of microarray technology” and falsely stated that he was shortlisted for the Nobel Prize, the Justice Department said.

A phone number listed for the company was disconnected. An attorney for Mr Schena, Todd A. Pickles, declined to comment Friday.

Arrayit compared itself at least once to Theranos, the failed blood testing startup, on its Facebook page, writing that its technology could use drops of blood “that are 250,000 times smaller than the volume of the Theranos nanotainer,” according to the First Complaint of the Department of Justice in 2020.

Elizabeth Holmes, the founder of Theranos, who once promised to revolutionize healthcare through a simple blood test, and Ramesh Balwani, a former top executive at the company, have been accused of exaggerating the capabilities of its blood-testing devices to appeal to investors and customers.

In January, Ms Holmes was convicted of four counts of fraud and in July Mr Balwani was found guilty of 12 counts of fraud.