NEW JERSEY
A federal jury on Wednesday convicted the former CEO of SCWorx Corp. (SCWorx), a publicly traded healthcare company, for his role in a scheme to mislead investors about SCWorx’s procurement of COVID-19 rapid test kits
This happened in the early days of the COVID-19 pandemic.
According to court documents and evidence presented at trial, Marc Schessel, 64, of New Paltz, New York, caused SCWorx to issue multiple public statements claiming that SCWorx was buying and reselling at least 48 million COVID-19 test kits, despite knowing that such statements were false and misleading.
Schessel issued or caused four false and misleading statements over five days in April 2020. These include an April 13 press release, an April 15 investor conference call, an April 16 SEC 8-K filing, and an April 17 press release.
Each announcement falsely claimed that SCWorx would receive millions of COVID-19 rapid test kits within two weeks, but no test kits were ever acquired.
Following these announcements, SCWorx’s share price surged over 400%, from around $2.25 to an intraday high of $14.88.
However, after SCWorx revealed it was terminating the COVID-19 rapid test kit agreements without acquiring any tests, the share price quickly fell below its pre-April 13, 2020, level.
The jury convicted Schessel of two counts of securities fraud. He is scheduled to be sentenced on Dec. 17 and faces a maximum penalty of 20 years in prison on count one and a maximum penalty of 25 years on count two.
The FBI Newark Field Office investigated the case.
Principal Assistant Deputy Chief Lucy Jennings and Trial Attorneys Kate McCarthy and Spencer Ryan of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys George Brandley and Angelica Sinopole for the District of New Jersey are prosecuting the case.