Silicon Valley founders of fecal matter company accused of bilking investors
SAN FRANCISCO, CA - SEPTEMBER 30: Jessica Richman, Co-founder and CEO of uBiome is presented with an award at the IVY Innovator Technology Awards, Presented by Cadillac at Pier 15 on September 30, 2015 in San Francisco, California. (Photo by Steve Je
SAN FRANCISCO - Two Silicon Valley entrepreneurs who founded a biotech company that tested fecal matter are accused of bilking their investors and health insurance providers, federal prosecutors said Thursday.
Zachary Schulz Apte and Jessica Sunshine Richman, co-founders of now-bankrupt microbiome testing company uBiome, were indicted Thursday on multiple federal charges, including conspiracy to commit securities fraud, conspiracy to commit health care fraud and money laundering.
Their court appearances have not been scheduled, and it was not immediately clear if they had attorneys who could speak on their behalf.
Apte, 36, and Richman, 46, founded uBiome in 2012 as a direct-to-consumer service called "Gut Explorer." Customers would submit a fecal sample that the company analyzed in a laboratory, comparing the consumer’s microbiome to others’ microbiomes, prosecutors said. The service cost less than $100 initially.
The company grew 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.
The federal indictment states that uBiome sought upwards of $300 million in reimbursement claims from private and public health insurers between 2015 and 2019. The company was ultimately paid more than $35 million for tests that "were not validated and not medically necessary."
The defendants are also accused of falsifying documents, lying and concealing facts about their billing model when asked by insurance providers, as well as misleading and defrauding their investors.