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Greenwich man indicted for misleading investors on COVID-19 tests

The United States Department of Justice issued an indictment against Marc Schessel of Greenwich, founder and former CEO of SCWorx based in New York, claiming he misled investors in 2020 regarding a deal to procure COVID-19 test kits from a supply company in Australia to raise the stock price of his company.

According to the indictment, a consultant and investor reached out to Schessel in March of 2020 because their stock value had decreased, saying, “The stock needs a boost for sure… it’s a real issue now.”

Schessel contracted with the supply company on April 6 after informing Schessel they had obtained approval to supply the tests by the Food and Drug Administration, but that approval was in doubt and never came to fruition, according to the Justice Department. 

Schessel learned the supply company was no longer able to supply the COVID tests on April 11, but moved forward with the press release on April 13, 2020, anyway, saying SCWorx was obtaining 48 million COVID rapid tests.

“Despite learning facts that cast significant doubt on the status of the COVID-19 test kit deals, Schessel repeatedly confirmed the status and terms of those arrangements on numerous occasions between approximately April 13, 2020, and April 17, 2020,” the Justice Department wrote in its press release. “In the wake of these announcements, Company-1’s share price surged, rising by over 400%, from approximately $2.25 to an intraday high of $14.88. As a result of this scheme, investors lost at least $116 million.”

Schessel allegedly apologized to the company’s board the same day the press release was issued, but the company’s stock had already soared over 400 percent, allowing the company to pay off a vendor, to whom they issued 100,000 shares of stock “that were worth significantly more than they would have been prior to the April 13 Announcement,” according to the indictment.

Despite knowing that the supply company could not supply the COVID-19 tests, and after receiving a cease-and-desist letter from the purchasing company, Schessel allegedly doubled down, issuing another press release on April 17, saying the company would be providing 2 million test kits per week.

By April 19, Schessel had received an email from the FDA indicating the supply company was not authorized to provide COVID-19 tests and by April 21, the Securities and Exchange Commission halted trading of SCWorx. 

Investors in New Jersey and elsewhere lost at least approximately $116 million,” selling their shares at a loss, according to the indictment.

“Schessel allegedly took advantage of the COVID-19 crisis as an opportunity to scam investors and manipulate the market,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division in the press release. “Today’s indictment reinforces our commitment to rooting out schemes that have exploited the pandemic and holding accountable those who have prioritized greed during an unprecedented public health emergency.”

SCWorx has reached a settlement agreement with the SEC to pay $600,000 in stock to harmed investors as part of a class-action suit, according to the SEC.

Schessel is indicted on two counts of securities fraud and could face up to 45 years in federal prison, authorities said. The Federal Bureau of Investigation in Newark is investigating the case.

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Marc E. Fitch, Senior Investigative Reporter

Marc E. Fitch

Marc worked as an investigative reporter for Yankee Institute and was a 2014 Robert Novak Journalism Fellow. He previously worked in the field of mental health is the author of several books and novels, along with numerous freelance reporting jobs and publications. Marc has a Master of Fine Arts degree from Western Connecticut State University.

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