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Former SCWorx CEO Convicted of Securities Fraud for COVID-19 Testing Claims

NEW YORK – The US Department of Justice said Wednesday that a jury has convicted the former CEO of healthcare firm SCWorx of securities fraud for lying to investors early in the COVID-19 pandemic that the company had secured a contract to acquire millions of COVID-19 rapid test kits.

The US Attorney's Office for the District of New Jersey said that Marc Schessel of New Paltz, New York, told investors in April 2020 that the company had a binding contract to buy the tests from an Australian supplier, knowing that the supplier had not secured US Food and Drug Administration marketing authorization for its test kits. Further, even if it had, SCWorx lacked the funds to pay for them. Schessel had been accused of making those claims over a five-day period in two press releases, an investor conference call, and a Form 8-K filing with the US Securities and Exchange Commission.

Following those public statements, shares of SCWorx rose to a high of $14.88 compared to about $2.25 prior to the announcements. SCWorx subsequently announced that it was ending the agreements without acquiring any tests from the Australian firm and shares of the firm returned to their pre-announcement price. Shares of the company were trading at $1.55 on the Nasdaq in early morning trading on Thursday.

Schessel is scheduled for sentencing on Dec. 17.