Rishi Shah, 37, founder and former CEO, and Shradha Agarwal, 37, former president, and Brad Purdy, 33, former chief operating officer of a Chicago-based health technology start-up, have been convicted for their roles in a $1 billion fraud scheme that impacted the company’s clients, lenders and investors.
The three have been convicted of defrauding Outcome Health’s lenders and investors. Shah has been convicted on five counts of mail fraud, ten counts of wire fraud, two counts of bank fraud, and two counts of money laundering.
Meanwhile, Agarwal has been convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. They face a maximum penalty of 30 years in prison for each count of bank fraud and 20 years in prison for each count of wire fraud and mail fraud.
According to the Department of Justice, Outcome installed television screens and tablets in doctor’s offices around the US and sold advertising space on these devices, most of whom were pharmaceutical companies. Shah and Purdy sold advertising inventory that they did not have to Outcome’s clients and charged the clients in full.
The scheme targeting Outcome’s clients began in 2011 and lasted till 2017 and resulted in at least $45 million of overbilled advertising services. Also, $110 million debt financing meant a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal. The $487.5 million equity financing resulted in a $225 million dividend to Shah and Agarwal.
All three former employees pleaded guilty prior to the trial.
