Greenwich Man Accused Of Misleading Investors About COVID-19 Tests: Feds

GREENWICH, CT — A former executive from Greenwich has been accused of misleading investors about his company receiving COVID-19 rapid test kits in the early days of the pandemic, causing investors to lose more than $116 million, according to federal prosecutors.

On Tuesday, Marc Schessel, 62, was indicted by a federal grand jury in New Jersey and charged with two counts of securities fraud, federal prosecutors from the Department of Justice said.

According to court documents, Schessel, a former chief executive officer and board chair of a publicly traded health care company based in New York, caused the company to issue multiple public statements stating that it was buying and reselling at least 48 million COVID-19 test kits, despite knowing that such statements were false and misleading, the DOJ said.

The Securities and Exchange Commission said in a news release the company is SCWorx Corp. The SEC announced charges against Schessel this week, and said the company has agreed to settle and pay a $125,000 civil penalty, the SEC said in a news release.

In early April 2020, Schessel made an agreement with an Australian company to obtain 2 million COVID-19 test kits per week for six months beginning on April 24 that year, the DOJ said.

At the same time, Schessel received a purchase order from a U.S.-based company that planned to purchase the weekly shipments, according to the DOJ.

The DOJ said that despite learning new information on or about April 11, 2020, that called into question whether the Australian company had COVID-19 tests to sell, Schessel had SCWorx release a news release on April 13 in which it announced the purchase order for 48 million COVID-19 rapid test kits.

After the news release, the DOJ said Schessel received additional information that further called into question the Australian company's arrangements for the tests. Schessel repeatedly confirmed the status and terms of those arrangements on several occasions between approximately April 13, 2020, and April 17, 2020, the DOJ noted.

After Schessel's announcements, SCWorx's share price surged, rising by over 400 percent, from approximately $2.25 to an intraday high of $14.88, the DOJ said. As a result of this scheme, the DOJ noted that investors lost at least $116 million.

"As alleged in the indictment, Marc Schessel exploited the scarcity of COVID-19 tests at the outset of the pandemic to defraud investors and artificially increase his company’s stock price," said U.S. Attorney Philip R. Sellinger for the District of New Jersey in a news release. "His alleged fraud cost investors millions of dollars in losses."

Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division said it's "unacceptable to fraudulently capitalize" on a national health crisis.

"The FBI, in tandem with our law enforcement partners, will continue to investigate anyone who undermines public safety and will bring those who commit fraud to justice," Quesada said in a news release.

If convicted, Schessel faces a total maximum penalty of up to 45 years in prison, the DOJ said. A federal district court judge will determine any sentence after considering the U.S. sentencing guidelines and other statutory factors.