San Francisco — A Silicon Valley executive has pleaded guilty to health care fraud after he lied to investors about using just a few drops of the drug to test for allergies and Covid-19 and costing up to $10,000 per allergy test, authorities said Friday.
The U.S. Department of Justice said in a statement that a federal jury on Thursday convicted Mark Sheenan of Los Altos, California, of paying bribes to doctors and defrauding the government after he overpaid Medicare $77 million.
Sheena, 59, of Sunnyvale, Calif.-based Araright Corp., says it has the only laboratory that can test for allergies and the coronavirus with the same fingerstick test.
Alexandra Block, an attorney representing Schena, did not immediately return a phone message Friday seeking comment.
The lawsuit against Sheena is similar to the well-known legal saga surrounding former Silicon Valley star Elizabeth Holmes, who dropped out of Stanford University in 2003 to found Theranos, a company that promised to revolutionize health care with hundreds of scans. So are diseases and other cases with a few drops of blood.
As Theranos CEO, Holmes went on to raise nearly $1 billion from successful business leaders such as Oracle founder Larry Ellison and media mogul Rupert Murdoch. Holmes, 38, was indicted in January on four felony counts of defrauding investors in the same San Jose, Calif., court where Sheena’s trial took place following a nearly four-month trial.
Holmes faces up to 20 years in prison at her Oct. 17 sentencing.
The two cases adjourned briefly Thursday morning as a jury in Sheena’s trial sent three questions to the judge, causing an hour-long delay in Holmes’ failed attempt to overturn the jury’s conviction against her.
Prosecutors allege that in 2020, after Ararite’s allergy testing business declined during the 2020 pandemic, Sheena falsely claimed that his company had tested for COVID-19 before developing the blood test technology. After his company submitted it to the Food and Drug Administration, the FDA did not notify them that the test was not accurate enough to provide emergency use, prosecutors said.
“Sheena orchestrated a deceptive marketing scheme that Dr. Anthony Fauci and other prominent government officials simultaneously ordered tests for both Covid-19 and allergies, and that patients who received an allergy Covid-19 test would also be tested for allergies. ” they said.
Wright’s stock price more than doubled in mid-March 2020, even as the stock market was falling, court documents show.
Sheena failed to release Araright’s SEC-required financial statements and concealed Araright’s bankruptcy, prosecutors said. The case against him is the first criminal securities fraud case related to the COVID-19 pandemic, he said.
Before the outbreak, from 2018 to February 2020, Sheena and other workers paid bribes to employers and doctors to conduct allergy tests for each patient, whether they needed them or not, for 120 allergies, from insects to food allergies, he said.
“Arrayt costs Medicare more per patient for blood-based allergy testing than any other laboratory in the United States, and has charged some commercial insurers more than $10,000 per test,” he said.
Sheena was charged with one count of health care fraud and wire fraud, two counts of health care fraud, one count of conspiracy to commit kickbacks, two counts of kickbacks and three counts of securities fraud.
He faces up to 20 years in prison at his January 30 sentencing.
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Associated Press technology writer Michael Liedtke contributed to this story from San Ramon, California.
