Richman and Apte are accused of falsely representing to investors that uBiome was a successful start-up.
On March 18, 2021, the SEC charged Jessica Richman and Zachary Apte with defrauding investors. Richman and Apte are the founders of a San Francisco-based medical testing company, uBiome, Inc. The SEC alleged that Richman and Apte defrauded investors out of $60 million by falsely portraying uBiome as a successful start-up with a proven business model and strong prospects for growth.
The SEC alleged that Richman, the CEO of uBiome, and Apte, the Chief Scientific Officer of uBiome, raised millions of dollars from investors by portraying uBiome as a “rapidly growing company” with a strong track record of receiving health insurance reimbursement for its clinical trials, which could allegedly help diagnose diseases.
On the contrary, uBiome’s success in generating revenue allegedly depended on convincing doctors to perform unnecessary tests and “other improper practices.” Richman and Apte purportedly concealed these improper tactics from investors and insurance companies. They allegedly ordered uBiome employees to provide insurers with backdated and misleading medical records to substantiate earlier claims for reimbursement.
Richman and Apte’s attempts to conceal the misconduct eventually fell short, leading to uBiome filing for bankruptcy and suspending its medical testing business. Richman and Apte reportedly gained millions by selling their own shares of uBiome during the fraudulent fundraising process.
The complaint 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 also seeking a court order officer and directors bars against Richman and Apte from engaging in future fraud. Richman and Apte are facing criminal charges for their misconduct as well.
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The Sonn Law Group is currently investigating claims surrounding Jessica Richman and Zachary Apte. For a free consultation, please call us now at 866-827-3202 or complete our contact form.