Zachary Schulz Apte and Jessica Sunshine Richman, co-founders of a fecal matter-testing biotech enterprise based in San Francisco, have been indicted on multiple federal charges that include conspiracy to commit securities fraud, conspiracy to commit healthcare fraud, and money laundering.
Apte and Richman founded their company, the currently bankrupt uBiome, back in 2012 as a direct-to-consumer service called "Gut Explorer".
The company analysed fecal samples provided by customers and compared "the consumer's microbiome to others' microbiomes”, AP reports citing prosecutors. The service initially cost less than $100.
The company eventually expanded to include "clinical" tests of gut and vaginal microbiomes, "which were aimed to be used by medical providers so uBiome could seek up to $3,000 in reimbursements from health insurance companies".
According to the federal indictment cited by AP, uBiome sought over $300 million in "reimbursement claims from private and public health insurers between 2015 and 2019", and was paid over $35 million for tests that "were not validated and not medically necessary".
"We allege that Richman and Apte touted uBiome as a successful and fast-growing biotech pioneer while hiding the fact that the company's purported success depended on deceit", said Erin Schneider, Director of the San Francisco regional office of the Securities and Exchange Commission. "Investors are entitled to know the material risks of the companies they are investing in, no matter how transformative those companies claim to be".
The company's San Francisco offices were raided by the FBI in 2019, and later that year, the business venture went bankrupt and shut down.
Apte and Richman were also accused of falsifying documents, lying, and concealing facts about their billing model when asked by insurance providers, and of misleading and defrauding their investors.
