I-TEAM: Founder of Silicon Valley lab charged with fraud in connection to COVID-19 antibody tests

SUNNYVALE, Calif. (KGO) -- The owner of a Silicon Valley laboratory has been arrested and charged with fraud in connection with his coronavirus antibody test.

This comes one day after the ABC7 I-Team had an exclusive interview with that owner, raising questions about the tests.

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Federal prosecutors say Dr. Mark Schena, owner of Sunnyvale's Arrayit Corporation, engaged in a scheme to defraud investors, insurance companies, and Medicare with a COVID-19 test that did not perform well enough.

Federal prosecutors told the magistrate in San Jose Wednesday morning that the 57-year-old Schena, could not attend the hearing because he was under coronavirus quarantine at Santa Rita Jail in Dublin. The government opposed releasing Schena without conditions.

William Frentzen, Assistant U.S. Attorney said at the hearing, "We believe there are issues with Mr. Schena regarding a potential danger to the community and a risk of flight, meaning non-compliance."

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But, the magistrate ordered that Schena be released Wednesday. A criminal complaint unsealed overnight shows he faces charges of "Conspiracy to Commit Health Care Fraud" and "Securities Fraud" in connection with his COVID-19 antibody test. The I-Team interviewed Dr. Schena for their investigation that aired Tuesday, about the test that they saw in use at a drive-thru site in San Jose.

Dan Noyes: "So, this hasn't been approved yet by the FDA."

Dr. Mark Schena: "That's correct."

Dr. Schena did not tell the I-Team - or investors according to the criminal complaint - that "the FDA informed Arrayit on April 17 that its COVID-19 test was not at an acceptable level of performance."

"What I can say is that we are working closely with the FDA, and we're following FDA guidelines for deploying the test," said Dr. Mark Schena.

The complaint alleges that Arrayit made more than $69 million in false and fraudulent claims for allergy and COVID-19 testing, with Medicare and private insurance companies, and that he made false claims about his company's sales to inflate Arrayit's stock price. It was already a penny stock, and lost 88% of its value Wednesday, to just $00.0013 per share.

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For our investigation, officials in Santa Clara County told us they had role in oversight for COVID-19 tests, but they said they are shocked by the charges.

"When you have in the middle of a pandemic individuals that are trying to make a buck from the fears of our residents, it's very upsetting," said Deputy Santa Clara County Executive David Campos.

As part of our investigation, the I-Team interviewed Vince Thayer and Ryan Hendrickson who've been using the Arrayit COVID-19 antibody test at drive-thru sites in San Jose.

Hendrickson of TestMe2 told us, "Not only does it tell you if you have COVID but if there's medical necessity for it will actually help discern anything else that's making your breathing tough, your your life miserable."

The I-Team reached them Wednesday afternoon, and they said, "We got duped, too." They are shutting down the TestMe2 drive-thru sites until they find another test kit and another lab.

Here's the full criminal complaint:



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