Founders of Poop-Testing Startup Accused of Huge Fraud

Not too long ago, the company was a trendy medical startup being compared with another trendy medical startup, Theranos. And now, as with Theranos, the founders are facing allegations of running a huge fraud, reports the San Francisco Chronicle. Zachary Schulz Apte and Jessica Sunshine Richman, co-founders of the now-defunct fecal-testing company Ubiome, were indicted last week and face charges including conspiracy to commit securities fraud, conspiracy to commit health care fraud, and money laundering, per the AP. Prosecutors allege that their Silicon Valley company raked in money for tests that "were not validated and not medically necessary." At one point, Ubiome was valued at $600 million after gaining the backing of prominent venture capital firms. The couple married in 2019, the same year their company shut down after filing for bankruptcy.

A report at Business Insider notes that the company started on a small scale in 2012, marketing their "poop tests as fun, educational tools to help ordinary people understand the community of bacteria living in and on them," aka the microbiome. In fact, they were so small that the company initially raised money through crowdfunding. But as interest grew, Apte and Richman shifted strategy in 2014 in a big way to go after money provided by medical insurers. Instead of those initial "fun" tests that cost about $100, the company began offering what they described as more clinical tests through doctors that cost insurers $3,000. Prosecutors, however, say the tests and the company's pitches to patients, the medical community, and VC firms amounted to a $60 million fraud. (Theranos' Elizabeth Holmes' trial is delayed because she's pregnant.)