Silicon Valley tech CEO sentenced to 8 years in prison following COVID and allergy test fraud scandal

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The former CEO of a Silicon Valley-based tech company was sentenced to eight years in prison after lied about his company’s ability to test for COVID-19 — in a manner similar to the claims that landed former Theranos CEO Elizabeth Holmes behind bars, according to federal prosecutors.

While heading up the Arrayit Corporation, Los Altos resident Mark Schena, 60, defrauded investors through his claims that he created a “revolutionary technology” by inventing medical tests that could diagnose virtually any disease through a single drop of the patient’s blood. Schena’s sentence was announced in a news release from Ismail Ramsey, the U.S. Attorney for the Northern District of California.

Prosecutors said Schena and his publicists falsely told investors that he was the “father of microarray technology,” that he was on the shortlist for a Nobel Peace Prize and that his company could be valued at $4.5 billion.

Schena was unsuccessful in an attempt to develop a COVID test once the pandemic hit, but continued to market his test as one in an attempt to avoid bankruptcy.

Prosecutors said that Schena falsely announced his company had created a COVID test in early 2020. He told federal agents that producing COVID tests was a simple task to switch from testing for allergies to the virus because it was like a pastry chef switching from baking “strawberry pies” to “rhubarb and strawberry pies.”

The Food and Drug Administration informed Schena that Arrayit’s COVID test was “not accurate enough” to receive emergency authorization to use in the early days of the pandemic — a fact that he hid from investors and test users. Schena also led a misleading marketing campaign falsely claiming that Dr. Anthony Fauci, then-Director of the National Institute of Allergy and Infectious Diseases, mandated that patients testing for COVID be tested for allergies at the same time.

“A Silicon Valley executive exploited the pandemic for profit, ultimately endangering patients with unproven COVID-19 tests,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division.

Prosecutors also said that Schena misled investors and the public throughout the pandemic. He never revealed that Arrayit was on the verge of bankruptcy, and fraudulently displayed the company’s laboratory as “busy and high-tech” to potential investors.

Schena often put out news releases and social media statements claiming that his company had partnered with other companies, government entities and public institutions like a children’s hospital and large health-care providers. According to prosecutors, he claimed that those entities signed lucrative deals to use Arrayit COVID tests, when in reality, those deals never existed, or were minor.

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