A married couple of San Francisco entrepreneurs were charged Thursday with several federal charges, the latest twist in the saga of a once-modern, now bankrupt fecal case-testing system.
Zachary Schulz Apte and Jessica Sunshine Richman, co-founders of the disbanded microbiome testing company uBiome, are accused of investing their investors and health insurance investors, federal prosecutors said. They were charged on Thursday with several federal charges, including conspiracy to commit security fraud, conspiracy to commit medical care and money laundering.
Their court appearances were not scheduled, and it was not immediately clear if they had lawyers who could speak on their behalf.
Apte (36) and Richman (46) founded uBiome in 2012 as a direct-to-consumer service called ‘Gut Explorer’. Prosecutors said customers submit a fecal sample that the company analyzes in a lab, comparing the consumer’s microbiome to others’ microbiome. The service initially cost less than $ 100.
The company included ‘clinical’ tests of intestinal and vaginal microbiome, which had to be used by medical providers so that uBiome could get up to $ 3000 reimbursement from medical insurance companies. The federal indictment states that between 2015 and 2019, uBiome requested more than $ 300 million in compensation applications from private and public health insurers. The company was eventually paid more than $ 35 million for tests that were “not validated and not medically necessary.”
Apte and Richman met in San Francisco in 2012 through the California Institute for Quantitative Biosciences Garage, an incubator used by UCSF. Together, they founded uBiome and received funding from Silicon Valley investors, such as 8VC in San Francisco and Andreessen Horowitz in Menlo Park, which owns 22% and 10% in uBiome, respectively, according to court documents.
For a time, they were the latest emerging company determined to disrupt the medical testing industry. In 2018, Richman was even named an ‘innovator’ winner in Goop’s ‘The Greater goop Awards’ and at its peak, uBiome was valued at $ 600 million.
Apte and Richman were married in 2019, the year they started his death spiral. In May, the FBI raided their San Francisco offices and uBiome suspended all tests and put the couple on administrative leave. In October 2019, just a month after filing for bankruptcy, the company liquidated and closed.
Prosecutors allege that Apte and Richman assured investors that their medical tests were reliable if they were not, as was the sensational collapse of Elizabeth Holmes’ Theranos blood test business. The couple ‘painted a false image of uBiome as a fast growing company with a strong record of reliable income through health insurance compensation for its tests. However, UBiome’s alleged success in earning the revenue was a sham, ‘the SEC wrote in a complaint. .
The defendants are also accused of falsifying documents, lying and concealing facts about their billing model at the request of insurance providers, as well as misleading and deceiving their investors.
The Associated Press contributed to this report.