A federal jury in New Jersey convicted the former CEO of SCWorx Corp. (SCWorx), a publicly traded healthcare company, Wednesday for his role in a scheme to mislead investors about SCWorx’s procurement of COVID-19 rapid test kits 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.
Specifically, Schessel made, or caused to be issued, four false and misleading statements during a five-day period in April 2020: an April 13 press release, an April 15 investor conference call, an April 16 8-K filing with the U.S. Securities and Exchange Commission; and an April 17 press release.
All four announcements claimed that SCWorx would receive millions of COVID-19 rapid test kits within two weeks, but Schessel and SCWorx never acquired a single COVID-19 test kit as part of the announced transaction.
In the wake of these public announcements, SCWorx’s share price surged, rising by over 400%, from approximately $2.25 to an intraday high of $14.88. After SCWorx announced that it was terminating these COVID-19 rapid test kit agreements without having acquired any tests, SCWorx’s share price quickly dropped below its pre-April 13, 2020, announcement price.
The jury convicted Schessel of two counts of securities fraud. He is scheduled to be sentenced on December 17 and faces a maximum penalty of 20 years in prison on count one and a maximum penalty of 25 years on count two.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
