Indian-origin executives of a Chicago-based start-up were among those convicted of running a USD 1 billion corporate fraud scheme.
“A federal jury convicted three former executives of Outcome Health, a Chicago-based health technology start-up company, for their roles in a fraud scheme that targeted the company’s clients, lenders, and investors and involved approximately USD 1 billion in fraudulently obtained funds,” the US justice Department said in an official statement.
A jury found health technology company Outcome Health co-founder and former CEO Rishi Shah guilty on 19 of 22 counts, co-founder and former president Shradha Agarwal guilty on 15 of 17 counts and former chief operating officer Brad Purdy guilty on 13 of 15 counts.
Outcome installed television screens and tablets in doctors’ offices around the United States and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies. According to evidence presented at trial, Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns.
Shah, 37, was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud and two counts of money laundering.
Agarwal, 37, was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud, while Purdy, 33, was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution.
The defendants face a maximum penalty of 30 years in prison for each count of bank fraud and 20-year imprisonment for each count of wire fraud and mail fraud.
Shah faces a maximum penalty of 10 years in prison for each count of money laundering. A sentencing hearing will be scheduled at a later date.
Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full.
Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts. Purdy and others at Outcome also inflated metrics that purported to show how frequently patients engaged with Outcome’s tablets installed in doctors’ offices. According to the trial evidence, the scheme targeting Outcome’s clients began in 2011, lasted until 2017, and resulted in at least USD 45 million of overbilled advertising services.
Shah, Agarwal, and Purdy were also convicted of defrauding the company's lenders and investors.
Shah, Agarwal, and Purdy used inflated revenue figures in the company's 2015 and 2016 audited financial statements to raise USD 110 million in debt financing in April 2016, USD 375 million in debt financing in December 2016, and USD 487.5 million in equity financing in early 2017.
The trio lied to investors and lenders to conceal their ongoing under-delivery of advertising campaigns for clients.
The USD 110 million debt financing resulted in a USD 30.2 million dividend to Shah and a USD 7.5 million dividend to Agarwal; the USD 487.5 million in equity financing resulted in a USD 225 million dividend to Shah and Agarwal.
Three other former employees of Outcome pleaded guilty prior to trial. Ashik Desai, the former chief growth officer pleaded guilty to one count of wire fraud; and Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai, Choi, and Han will be sentenced at a date to be determined.
A spokesperson for Shah said in a statement: “Today's verdict deeply saddens Shah, and he will exhaust every avenue to overturn this result.”
Theodore Poulos, an attorney for Purdy said in a statement: “We are profoundly disappointed with the jury's verdict in this complex and nuanced case, particularly given the plethora of evidence adduced at trial, which showed that certain critical information was intentionally withheld from Brad Purdy."
Indian-origin executives of a Chicago-based start-up were among those convicted of running a USD 1 billion corporate fraud scheme.
“A federal jury convicted three former executives of Outcome Health, a Chicago-based health technology start-up company, for their roles in a fraud scheme that targeted the company’s clients, lenders, and investors and involved approximately $1 billion in fraudulently obtained funds,” The US justice Department said in an official statement.
A jury found health technology company Outcome Health co-founder and former CEO Rishi Shah guilty on 19 of 22 counts, co-founder and former president Shradha Agarwal guilty on 15 of 17 counts and former chief operating officer Brad Purdy guilty on 13 of 15 counts.
Outcome installed television screens and tablets in doctors’ offices around the United States and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies. According to evidence presented at trial, Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns.
Shah, 37, was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud and two counts of money laundering.
Agarwal, 37, was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud, while Purdy, 33, was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution.
The defendants face a maximum penalty of 30 years in prison for each count of bank fraud and 20-year imprisonment for each count of wire fraud and mail fraud.
Shah faces a maximum penalty of 10 years in prison for each count of money laundering. A sentencing hearing will be scheduled at a later date.
Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full.
Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts. Purdy and others at Outcome also inflated metrics that purported to show how frequently patients engaged with Outcome’s tablets installed in doctors’ offices. According to the trial evidence, the scheme targeting Outcome’s clients began in 2011, lasted until 2017, and resulted in at least USD 45 million of overbilled advertising services.
Shah, Agarwal, and Purdy were also convicted of defrauding the company's lenders and investors.
Shah, Agarwal, and Purdy used inflated revenue figures in the company's 2015 and 2016 audited financial statements to raise USD 110 million in debt financing in April 2016, USD 375 million in debt financing in December 2016, and USD 487.5 million in equity financing in early 2017.
The trio lied to investors and lenders to conceal their ongoing under-delivery of advertising campaigns for clients.
The USD 110 million debt financing resulted in a USD 30.2 million dividend to Shah and a USD 7.5 million dividend to Agarwal; the USD 487.5 million in equity financing resulted in a USD 225 million dividend to Shah and Agarwal.
Three other former employees of Outcome pleaded guilty prior to trial. Ashik Desai, the former chief growth officer pleaded guilty to one count of wire fraud; and Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai, Choi, and Han will be sentenced at a date to be determined.
A spokesperson for Shah said in a statement: “Today's verdict deeply saddens Shah, and he will exhaust every avenue to overturn this result.”
Theodore Poulos, an attorney for Purdy said in a statement: “We are profoundly disappointed with the jury's verdict in this complex and nuanced case, particularly given the plethora of evidence adduced at trial, which showed that certain critical information was intentionally withheld from Brad Purdy."
