Outcome Health executives found guilty in $1B fraud case

Three former executives of healthcare technology startup Outcome Health were found guilty by a federal jury April 11 on 47 charges of fraud and acquitted of seven charges. 

The verdict followed a 10-week trial for Chicago-based Outcome Health's co-founder and former CEO Rishi Shah, former President Shradha Agarwal and former COO and CFO Brad Purdy, who were charged for their alleged role in a scheme involving approximately $1 billion in fraudulently obtained funds. 

Mr. Shah was found guilty on 19 of 22 counts; Ms. Agarwal was found guilty on 15 of 17 counts; Mr. Purdy was found guilty on 13 of 15 counts, the Chicago Tribune reported. A spokesperson for Mr. Shah told the Tribune that he plans to appeal the verdict delivered April 11. Plans for appeal from Ms. Agarwal and Mr. Purdy were not immediately specified in the report. 

Outcome Health was founded in 2006 and operated as a digital provider of medical information and advertising in physician offices. The startup installed screens in medical offices free of charge and hosted advertisements on them, charging advertisers for the promotional placements. The company grew fast, with 500 employees and a reported $5.5 billion valuation in May 2017 with funding from Goldman Sachs, Alphabet and Pritzker Group Venture Capital, among others. 

In fall 2017, The Wall Street Journal reported that Outcome Health misled advertisers — most of which were pharmaceutical companies — by charging them for more screens than were installed and misreporting advertising campaign results. Shortly after the report's publication, a group of investors sued Outcome Health and the company saw a mass exodus of employees, who resigned, were placed on leave or terminated. 

In October 2019, the company resolved a fraud investigation with the Justice Department by agreeing to pay $70 million and cooperate with the agency in its investigation of individual Outcome Health executives. The company admitted that from 2012 to 2017, former executives and employees perpetrated a scheme to defraud its clients by selling advertising inventory that it did not have.

Weeks later, the Justice Department criminally charged four executives — Mr. Shah, Ms. Agarwal, Mr. Purdy and former Chief Growth Officer Ashik Desai — for their alleged role in a company scheme that "tricked clients into paying for advertising it failed to deliver and served to falsely inflate the value of Outcome Health," according to Assistant U.S. Attorney Brian Hayes. 

Mr. Shah, Ms. Agarwal and Mr. Purdy were each charged with various counts of mail fraud, wire fraud and bank fraud. Mr. Purdy also faced a charge on one count of false statements to a financial institution, and Mr. Shah also faced charges on two counts of transactions in criminal proceeds. 

Mr. Desai pleaded guilty to conspiracy to commit wire fraud and struck a deal with the government for reduced sentence in exchange for testimony. 

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