- A special committee of uBiome’s board is overseeing an investigation into the microbiome-testing company’s billing practices after the FBI raided the startup on April 26.
- Business Insider has learned that the investigation is led by Milbank partner George Canellos, who serves as global head of the firm’s litigation and arbitration group.
- In a letter to investors sent Wednesday, uBiome’s interim CEO John Rakow revealed that beyond the FBI, the US Attorney’s Office for the Northern District of California and “several other US and California governmental agencies” were involved in the April 26 search.
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The board of microbiome-testing company uBiome has picked a former federal prosecutor to lead an independent investigation into the company’s billing practies.
George Canellos a partner in Milbank’s New York office and global head of its litigation and arbitration group, will run the probe, Business Insider has learned. The plan is to gain a better understanding of how the company was operating and bring the results to the government and investors, according to two people familiar with the matter.
On April 26, the FBI raided uBiome’s headquarters, reportedly over the company’s billing practices. Customer complaints obtained by Business Insider show a pattern of sending patients unexpected bills of up to $3,000 for years.
After the raid, the company placed its founders and co-CEOs, Jessica Richman and Zac Apte, on administrative leave. John Rakow, the company’s general counsel, is acting as the interim CEO, and uBiome has said publicly that it plans to cooperate with investigations and that it has launched its own investigation into its company’s billing practices. The company also suspended sales of two of its products.
Canellos previously worked at the US Securities and Exchange Commission where his roles included co-director of the Division of Enforcement and director of the SEC’s New York regional office. He also spent nine years at the US Attorney’s Office for the Southern District of New York.
UBiome and Canellos didn’t respond to requests for comment.
In a letter to investors sent Wednesday and obtained by Business Insider, Rakow laid out his immediate plans.
Among his top goals is “restoring the company’s credibility, including restoring the integrity of uBiome’s leadership and billing practices,” he wrote.
The letter reveals that beyond the FBI, the US Attorney’s Office for the Northern District of California and “several other US and California governmental agencies” were involved in the April 26 search.
uBiome has raised $105 million from investors including OS Fund, 8VC, Andreessen Horowitz, and Y Combinator, racking up a $600 million valuation. The company runs lab tests that provide information about the bacteria in your body, called the microbiome. Most of the tests work by having customers use a swab to take a sample of their poop from recently used toilet paper.
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