San Francisco Poop-Testing Company Charged with Fraud

  • Imagine swabbing your butt only to find out the procedure was for nothing. At least we’d be upset.

You might think your poop is nothing but a waste product, but you’d be wrong. It can actually hold valuable information about your health.

That’s why many companies provide different kinds of services to analyze your bodily waste. But for one such company, their test material just hit the fan.

On March 18, the federal Securities and Exchange Commission (SEC) charged San Francisco-based uBiome with massive investor and insurance fraud. The company, founded in 2012, provided services that they claimed accurately analyze a customer’s intestinal microbiome.

Except that they didn’t. According to the SEC, the company’s tests were nothing but bulls-… Uh, bull fecal samples.

According to the SEC, uBiome’s founders Jessica Richman, 46, and Zachary Schulz Apte, 36, collected more than $60 million from investors based on bogus claims about their company. They presented their firm as a “successful start-up with a proven business model,” the SEC claims.

“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 SEC complaint reads.

“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,” the agency adds.

Wait, they were making money by getting doctors to swab people’s butts for nothing? Talk about low.

“Stick this up your butt.” “For, like, medical reasons?” “Sure, why not.”

The Process of Deceit

This is a humiliating fall from grace for uBiome. Upon its founding, the company was touted as the up-and-coming champions in the field of butt-swabbing.

The company’s service model was simple. For a fee as low as $100, their customers would get their very own sample collection kit.

The kit contained several color-coded small vials, with a Q-Tip-like swab attached to the lid. Based on the color, people would use the swab to collect a sample from the appropriate bodily area, from behind the ears to the gastrointestinal tract.

Just so we’re clear, that means your anus.

After the swab, the customer would mail the kit back to uBiome. They would then analyze the samples.

To keep their costs low, the company claimed to analyze for only one gene – the 16S ribosomal RNA gene. According to Berkeley Science Review, this one gene is sufficient to determine what bacteria are present in a person’s internal microbiome.

After the analysis, customers would be able to view the results on uBiome’s website. Although they never claimed their results were all-encompassing, they said their business would demonstrate that “citizen science can guide meaningful research.”

According to the company, their work would allow people to follow the development of their microbiome over time. This could then guide their lifestyle choices from diet to exercise routines.

Claims Upon Claims

As it turns out, it wasn’t quite so. As SEC claims, the company’s entire business model revolved around false or dubious medical tests.

Customers who bought the test didn’t learn anything new. One uBiome customer, Marc Harris, said his doctor believed the tests were pointless, and he ended up completing only two of the six swabs.

Despite the incomplete test, his insurance records showed that uBiome had received five payments for it. Each payment was nearly $3,000 dollars.

Apparently, this was uBiome’s regular modus operandi. They would bill insurance companies several times for the tests.

To hide their shady practices from investors and insurers, the SEC says uBiome gave them falsified or outdated medical records. This allowed to keep raking in money from investments and insurance claims.

Game Over, Man

But with a paper trail as massive as in medical testing, it should come as no surprise that eventually their cover got blown. In 2019, the company officially shut down, but not before the FBI raided their offices.

“Richman and Apte’s efforts to conceal the practices unraveled, which led to uBiome suspending its medical test business and entering bankruptcy,” says the SEC.

In addition to claiming insurance and investors funds, the owners sold their company’s stock.

“Richman and Apte were each enriched by millions through selling their own uBiome shares during the fraudulent fundraising round,” the SEC alleges.

Erin Schneider, director of the SEC San Francisco Regional Office, said uBiome’s reputation as a “fast-growing biotech pioneer” was built on deceit.

“Investors are entitled to know the material risks of the companies they are investing in, no matter how transformative those companies claim to be,” Schneider said.

The sad part about it all is that microbiome testing can be a genuinely helpful medical procedure. Actual doctors can analyze the bacterial balance and draw conclusions on what might be ailing their patient.

We can only hope fraudulent companies like uBiome don’t end up undermining public trust in medical science.

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