Biotech Founders Duped Insurers, Raised $60 Million on False Promises!

SEC v. Jessica Richman and Zachary Apte — U.S. Securities and Exchange Commission Litigation Release No. 26641, dated September 16, 2026.

Jessica Richman and Zachary Apte, co-founders of uBiome, Inc., defrauded investors by falsely claiming the company had strong revenue from health insurance reimbursements. In reality, their success depended on deceiving doctors and improper billing practices, which led to insurers clawing back payments and the company's eventual bankruptcy. Both founders settled with the SEC, agreeing to penalties and officer-and-director bars.

In Plain English

Imagine you're selling lemonade, but you tell buyers you're making a lot of money because people are paying you for it. In reality, you're tricking people into buying it by saying it's healthy, even when it's not. When the truth comes out, people stop paying, and your lemonade stand has to close. That's what happened here: the founders of a company lied about how much money they were making from health tests, leading to investor losses and the company shutting down.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Founding uBiome and Raising Capital Jessica Richman and Zachary Apte founded uBiome, a medical testing company, and in 2018, they raised approximately $60 million in a Series C fundraising round. They told investors the company was 'inventing the microbiome industry' and had a strong track record of receiving health insurance reimbursements for its tests.
2. Misrepresenting Company Performance Richman, as CEO, and Apte, as Chief Scientific Officer, falsely portrayed uBiome as a rapidly growing company with reliable revenue. They assured investors that the company's business model and tests were widely accepted by health insurance companies.
3. Deceiving Doctors and Insurers The company's purported success in generating revenue was a sham, depending on duping doctors into ordering unnecessary tests. Richman and Apte directed these improper practices, which involved misleading medical records provided to insurers.
4. Concealing Improper Practices Despite concerns raised by uBiome employees, Richman and Apte failed to take action to remedy the improper practices. They also actively concealed these practices from uBiome's general counsel, board, and insurers, even directing employees to provide backdated and misleading medical records.
5. Discovery and Collapse The scheme unraveled in April 2019 when the company's Board of Directors initiated an internal investigation following an FBI search warrant. This investigation revealed the improper billing practices, making the business model untenable.
6. Company Ceases Operations Following the revelations, uBiome suspended its clinical tests business in 2019 and subsequently ceased operations, filing for Chapter 7 bankruptcy protection. The company is currently undergoing liquidation.

The Enforcement Action

On September 14, 2026, the SEC filed consents and proposed final judgments as to Jessica Richman and Zachary Apte, co-founders of uBiome, Inc. The SEC's complaint, filed on March 18, 2021, alleged that Richman and Apte raised funds from investors by falsely portraying the company as achieving rapid growth based on its strong track record of receiving health insurance reimbursements. The complaint further alleged that this claim was false and misleading because uBiome's purported success depended on duping doctors into ordering unnecessary tests and other improper practices directed by Richman and Apte, which, once discovered, led insurers to claw back their previous reimbursement payments to uBiome. Without admitting the allegations, Richman and Apte consented to permanent injunctions from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; three-year officer-and-director bars; three-year prohibitions from participating in the issuance, purchase, offer, or sale of any security (except for personal accounts); and each to pay a $125,000 penalty.

Named in this action: Jessica Richman, Zachary Apte.

Original SEC litigation release ↗ · Browse all cases