Rishi Shah, the co-founder and former CEO of Outcome Health, Shradha Agarwal, the former president of Outcome, and Brad Purdy, the former COO and CFO, have been convicted by a federal jury for their roles in a fraud scheme that targeted the company’s clients, lenders, and investors which involved nearly $1 billion in fraudulently-obtained funds.
Outcome Health: Charges and Convictions
Shah was convicted on 19 criminal counts of wire, mail, and bank fraud, while Agarwal was convicted on 15 counts and Purdy was found guilty on 13 counts of similar charges along with making a false statement to a financial institution.
The defendants could face years in prison as a result of the convictions. It is likely that they will appeal the verdict.
Outcome Healthcare, formerly called ContextMedia, was one of Chicago’s high-flying startups, pulling in $500 million during its first round of funding in May 2017 and attracting high-profile investors such as Goldman Sachs and Google’s parent company, Alphabet. The company was valued at $5.5 billion at the time.
The company installs TVs and tablets in physicians’ offices and sells targeted ads to pharmaceutical companies.
How the drama began
Outcome’s troubles started in 2017 when The Wall Street Journal reported that the company inflated data to pharmaceutical companies to boost ad sales. Things continued to unravel when the company was sued by investors who wanted to get their nearly $500 million investment back, claiming the company provided investors with fraudulent data and financial reports.
In 2019, Outcome agreed to pay $70 million as part of a 2019 deal to resolve federal fraud charges.
According to the non-prosecution agreement, as part of its settlement with the DOJ, Outcome admitted that from 2012 to 2017 former executives and employees of the company fraudulently sold ads to clients. Federal investigators said Outcome overbilled clients by more than $6 million in 2015 and by more than $25 million in 2016.
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