SEC v. Jessica Richman; and Zachary Apte, No. LR-25056, Northern District of California (Mar. 19, 2021) — Press Release

SEC Charges Co-Founders of San Francisco Biotech Company with $60 Million Fraud Litigation Release No. 25056 / March 19, 2021 Securities and Exchange Commission v. Jessica Richman and Zachary Apte, No. 3:21-cv-01911 (N.D. Cal. filed March 18, 2021) The Securities and Exchange Commission charged Jessica Richman and Zachary Apte, co-founders of uBiome, Inc., a San Francisco-based private medical testing company, with defrauding investors out of $60 million by falsely portraying uBiome as a successful start-up with a proven business model and strong prospects for future growth. The SEC's complaint alleges that Richman, uBiome's CEO, and Apte, its Chief Scientific Officer, raised funds from investors - millions of dollars of which went to Richman and Apte - by painting a false picture of uBiome as a rapidly growing company, which Richman told investors was "inventing the microbiome industry" and making "products that improve people's lives." According to the complaint, Richman and Apte portrayed the company as having a strong track record of receiving health insurance reimbursement for its clinical tests, which purportedly could detect microorganisms and assist in diagnosing disease. The complaint alleges that these claims were false and misleading because uBiome's purported success in generating revenue depended on duping doctors into ordering unnecessary tests and other improper practices that Richman and Apte directed, which, if discovered, would have led to insurers refusing to reimburse uBiome. According to the complaint, Richman and Apte acted to conceal the improper practices from investors and insurers, including directing uBiome employees to provide insurers with backdated and misleading medical records to substantiate the company's prior claims for reimbursement. Ultimately, the complaint alleges, Richman and Apte's efforts to conceal the practices unraveled, which led to uBiome suspending its medical test business and entering bankruptcy. According to the complaint, Richman and Apte were each enriched by millions through selling their own uBiome shares during the fraudulent fundraising round. The SEC's complaint, filed in federal court in San Francisco, charges Richman and Apte with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking court orders, including officer and director bars, to prevent Richman and Apte from engaging in future fraud, as well as orders requiring them to disgorge their ill-gotten gains from the violations and pay civil penalties. In a parallel action, the U.S. Attorney's Office for the Northern District of California announced criminal charges against Richman and Apte. The SEC's investigation was conducted by David Zhou, Tracy Combs, Crystal Boodoo, and Thomas Eme and supervised by Jennifer J. Lee and Monique C. Winkler of the San Francisco Regional Office. The SEC's litigation will be led by Bernard B. Smyth, David Zhou, and Thomas Eme. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of California, Federal Bureau of Investigation, U.S. Postal Inspection Service, Defense Criminal Investigative Service, and Department of Health and Human Services Office of Inspector General. SEC Complaint

SEC Charges Co-Founders of San Francisco Biotech Company with $60 Million Fraud Litigation Release No. 25056 / March 19, 2021 Securities and Exchange Commission v. Jessica Richman and Zachary Apte, No. 3:21-cv-01911 (N.D. Cal. filed March 18, 2021) The Securities and Exchange Commission charged Jessica Richman and Zachary Apte, co-founders of uBiome, Inc., a San Francisco-based private medical testing company, with defrauding investors out of $60 million by falsely portraying uBiome as a successful start-up with a proven business model and strong prospects for future growth. The SEC's complaint alleges that Richman, uBiome's CEO, and Apte, its Chief Scientific Officer, raised funds from investors - millions of dollars of which went to Richman and Apte - by painting a false picture of uBiome as a rapidly growing company, which Richman told investors was "inventing the microbiome industry" and making "products that improve people's lives." According to the complaint, Richman and Apte portrayed the company as having a strong track record of receiving health insurance reimbursement for its clinical tests, which purportedly could detect microorganisms and assist in diagnosing disease. The complaint alleges that these claims were false and misleading because uBiome's purported success in generating revenue depended on duping doctors into ordering unnecessary tests and other improper practices that Richman and Apte directed, which, if discovered, would have led to insurers refusing to reimburse uBiome. According to the complaint, Richman and Apte acted to conceal the improper practices from investors and insurers, including directing uBiome employees to provide insurers with backdated and misleading medical records to substantiate the company's prior claims for reimbursement. Ultimately, the complaint alleges, Richman and Apte's efforts to conceal the practices unraveled, which led to uBiome suspending its medical test business and entering bankruptcy. According to the complaint, Richman and Apte were each enriched by millions through selling their own uBiome shares during the fraudulent fundraising round. The SEC's complaint, filed in federal court in San Francisco, charges Richman and Apte with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking court orders, including officer and director bars, to prevent Richman and Apte from engaging in future fraud, as well as orders requiring them to disgorge their ill-gotten gains from the violations and pay civil penalties. In a parallel action, the U.S. Attorney's Office for the Northern District of California announced criminal charges against Richman and Apte. The SEC's investigation was conducted by David Zhou, Tracy Combs, Crystal Boodoo, and Thomas Eme and supervised by Jennifer J. Lee and Monique C. Winkler of the San Francisco Regional Office. The SEC's litigation will be led by Bernard B. Smyth, David Zhou, and Thomas Eme. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of California, Federal Bureau of Investigation, U.S. Postal Inspection Service, Defense Criminal Investigative Service, and Department of Health and Human Services Office of Inspector General. SEC Complaint