In the latest legal fallout from an alleged fraud related to the COVID-19 pandemic, the U.S. Securities and Exchange Commission has accused the president of biotech firm Arrayit of making false claims to investors.
According to the SEC, Mark Schena stated that Arrayit had developed a COVID-test and that it was awaiting emergency approval when, in fact, the company had not yet purchased all the essential components for such a test and had not applied to the Food and Drug Administration for an emergency use authorization.
The SEC’s civil complaint against Schena came three months after the Department of Justice brought criminal charges against him in what was its first securities fraud prosecution related to the pandemic.
“We allege that Mark Schena took advantage of the COVID-19 pandemic at the expense of investors,” Erin E. Schneider, director of the SEC’s San Francisco Regional Office, said in a news release. “A pandemic does not exempt public company executives from their responsibility to make accurate disclosures.”
Schena, 57, has served as Arrayit’s president and chief science officer since 2008 and is married to its CEO, Rene Schena. The Sunnyvale, Calif.-based company has claimed to be developing a revolutionary “microarray” test for allergies using a drop of blood.
In March 2020, Schena told investors in emails that “we have a test for COVID-19,” that Arrayit had “received more than 50,000 requests” for its test and that “Our team is coordinating with local, state and federal agencies and with our distributors to make this test available to as many patients as possible on an expedited timeline.”
“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,’” he allegedly told investigators.
The SEC also alleged that between October 2018 and March 2019, Schena misled investors by claiming that Arrayit was preparing to become current on delinquent financial reports for the first time since November 2015.