Jessica Richman and uBiome
Eric Millette / Forbes Collection
Jessica Richman and Zachary Apte, accountants of uBiome medical test, were charged Thursday with defrauding investors by the Security and Exchange Commission. The federal agency claims that the fraud amounted to $ 60 million, saying the pair painted “a false picture of uBiome as a fast-growing company with a strong history of revenue.” reliable admission through health insurance reimbursement for his exams. ”
Erin Schneider, director of the SEC’s San Francisco Regional Office, said in a statement that “the company’s proven success depends on deception. ”
Founded in 2012, San Francisco – based uBiome started the company in an unconventional way to start a biotech: through a Kickstarter campaign. His offer was an experiment at home to sort out the DNA of their customers, which could be used to improve health.
The success of the campaign has led to investment in Silicon Valley enterprise companies such as 8VC and Andreessen Horowitz. His last round of funding, in September 2018, valued the company at nearly $ 600 million. That year, he made Forbes ’Next Billion Dollar Startup list, claiming their annual revenue was $ 100 million.
In April 2019, uBiome’s offices were looted by the FBI, prompting an investigation by the company’s board of directors. In July of the same year, Richman and Apte resigned as co-heads of the company. In October 2019, the company filed a chapter 7 breach to liquidate and shut down its assets. These proceedings are still ongoing.
The complaint lodged by the SEC does not take any words, stating that “uBiome’s proven success in generating revenue, however, was a complaint. He was responsible for getting doctors to order unnecessary tests and other inappropriate practices led by Richman and Apte and which, once they found insurers, provided the reimbursement payments. previously with uBiome. ”
The SEC continues to allege that Apte and Richman kept the illegal behavior secret from their board and general counsel, and even ordered their own employees to “medical records that are outdated and misleading. to insurers to verify the company’s prior claims for reimbursement. ”
During that C series in September, the SEC maintains that Richman and Apte did not make their investors aware of their billing issues with insurance companies, and also falsely reported in the desks pitch that the existing insurance billing codes covered uBiome tests. The group says the company’s investors relied on these misconceptions when they funded the C series.
In the complaint, the SEC calls on the court to prevent both Richman and Apte from ever serving as an officer of a public trading company, to prevent them from buying or selling. sell shares other than their own personal accounts, forcing Richman and Apte to return their shares. investor money with interest, and pay additional criminal penalties.
“Investors have a right to know the substantial risks of the companies in which they invest, no matter how transformative these companies claim to be,” Schneider said.