By Dean Seal


The founder and former chief executive of SCWorx Corp. has been charged with securities fraud for allegedly misleading investors about the company's procurement of Covid-19 rapid test kits early in the pandemic.

The U.S. Department of Justice said Tuesday that Marc Schessel, 62, has been indicted for allegedly claiming in April 2020 that SCWorx would buy and resell at least 48 million tests despite the fact that the company had not secured a legitimate supplier or executed a purchase agreement.

Schessel's claims caused SCWorx's share price to surge more than 400% in a single day, but the U.S. Securities and Exchange Commission halted trading in the stock roughly a week later, citing concerns about the accuracy of the company's claims.

The DOJ alleges that SCWorx investors lost more than $116 million as a result of Schessel's misrepresentations. He faces two charges of criminal securities fraud, and up to 45 years in prison if convicted.

The SEC has filed a parallel civil enforcement action against Schessel in connection with the DOJ's allegations.

Without admitting or denying the allegations, SCWorx has agreed to resolve a related SEC action against it for a $125,000 penalty and roughly half a million dollars in disgorgement and interest.

The company said in January 2021 that Schessel would be stepping back from his role as SCWorx's CEO and would instead continue with the company as a consultant.

Shares rose 3.9% in after-hours trading to 80 cents.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

05-31-22 1857ET