Feds: Greenwich CEO misled investors about selling COVID tests

A former executive from Greenwich was charged Tuesday after he allegedly misled investors about his company getting COVID-19 rapid test kits early in the pandemic, according to federal prosecutors.

Marc Schessel, 62, of Greenwich, was the former chief executive officer of SCWorx, a publicly-traded health care company based in New York. The U.S. Securities and Exchange Commission also charged SCWorx Corp. Tuesday. The company has agreed to settle the SEC’s charges and will pay a $125,000 civil penalty, according to the SEC.

Prosecutors allege that Schessel caused the company to issue multiple public statements claiming it was buying and reselling at least 48 million COVID-19 test kits, “despite knowing that such statements were false and misleading,” according to the U.S. Department of Justice.

“It is unacceptable to fraudulently capitalize on a national health emergency,” said Assistant Director Luis Quesada of the FBI’s

Criminal Investigative Division.

Assistant Attorney General Kenneth Polite, Jr. agreed, saying “Schessel allegedly took advantage of the COVID-19 crisis as an opportunity to scam investors and manipulate the market,” in a press release.

The 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,” Polite added.

A federal grand jury in New Jersey charged Schessel Tuesday with two counts of securities fraud. If convicted, he faces up to 45 years in prison, the U.S. Department of Justice said in a press release.

In April 2020, Schessel made an agreement with an Australian company to get two million COVID-19 test kits per week for six months starting on April 24. Schessel then received a purchase order from a U.S.-based company that planned to purchase the weekly shipments, according to the DOJ.

Around April 11 of that year, Schessel

learned new information that questioned whether the Australian company had COVID-19 tests to sell that could be distributed in the United States. Despite this, Schessel had SCWorx issue a press release on April 13 that it would order 48 million COVID-19 rapid tests.

After the press release, Schessel received additional information that further called into question the arrangements. Schessel “repeatedly confirmed the status and terms of those arrangements on numerous occasions between approximately April 13, 2020 and April 17, 2020,” according to the Department of Justice.

In the wake of these announcements, SCWorx’s share price surged by more than 400 percent — from $2.25 to $14.88, the Department of Justice said.

The Department of Justice said investors lost at least $116 million from the scheme.

In addition to the $125,000 civil penalty, SCWorx has agreed to a repay $471,000 in profits plus prejudgment interest of more than $32,000, according to the SEC.