As if the coronavirus pandemic wasn’t bad enough as it is, fraudsters in the medical industry are manipulating it to further their wealth. Over the past few months, the Allegiant Experts Blog has highlighted a number of stories based on fraudulent activities involving COVID-19 testing. This week’s blog entry adds to that list.
As reported by the United States Department of Justice this week, the president of a California-based medical technology company was charged for his role in a Medicare scheme.
Mark Schena of Los Altos, California has been charged.
The 57 year-old is the president of Arrayit Corporation. He has been charged in a complaint that alleges his participation in schemes that involved the submission of over $69 million in false and fraudulent claims for allergy and COVID-19 testing.
As part of his scheme, Schena allegedly mislead investors, manipulated his company’s stock price and conspired to commit health care fraud. The DoJ notes that this case is the first criminal securities fraud prosecution related to the COVID-19 pandemic. The defendant is charged with one count of securities fraud and one count of conspiracy to commit health care fraud.
Schena’s scheme is believed to have started in or around 2018.
It lasted until February of this year. He is accused of paying kickbacks and bribes to recruiters and doctors to run an allergy screening test for 120 allergens. Such allergens included insect bites and food allergies. The screenings were run on every patient regardless of whether or not it was medically necessary.
Schena and his co-conspirators then made numerous misrepresentations to potential investors. They included Arrayit’s allergy test sales, the company’s financial condition and its future prospects. He and his team also issued press releases and tweeted about partnerships with Fortune 500 companies, government agencies and public institutions. They did all this without disclosing that such partnerships either did not exist or were of minimal value.
This past March, the COVID-19 crisis really took off.
During this time, Schena and others made several false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests. They claimed the tests were in compliance with state and federal regulations and made numerous misrepresentations to potential investors about them.
According to the DoJ report, Schena claimed it was easy to develop a COVID-19 test. In fact, he remarked that the switch from testing for allergies to testing for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.” As a result, his company’s stock price doubled in mid-March. Meanwhile, Schena and others never disclosed that the tests were neither valid nor accurate.
David L. Anderson is a U.S. Attorney of the Northern District of California. “The allure of cheap reliable alternatives to today’s standard blood tests panels has captured the imagination of the health care industry, making such alternatives a prime subject for fraudsters,” he is quoted as saying in the DoJ report, “The scheme described in the complaint, in which the defendant allegedly leveraged this allure by appending the fear of the COVID-19 pandemic, amounts to a cynical multi-million dollar hoax.”
Are you an attorney currently working on a health care fraud case?
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