2 Indian CEOs $1 Billion Fraud

Two former executives of a Chicago-based health tech start-up were sentenced for fraud involving the company’s clients, lenders, and investors.

The US Department of Justice reported that the scheme involved around $1 billion (Rs 7500 crore) in fraudulently obtained funds.

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The convicted executives are two Indian Americans, Rishi Shah, 38, co-founder and former CEO of Outcome, and Shradha Agarwal, 38, co-founder and former president. Also involved was Brad Purdy, 35, the former COO and CFO of Outcome.

Shah received a seven-and-a-half-year prison sentence on June 26, Agarwal was sentenced to three years in a halfway house on June 30, and Purdy got two years and three months in prison, also on June 30.

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The company, Outcome, founded in 2006 and previously known as Context Media, installed screens in doctors’ offices and sold ad space to pharmaceutical companies.

Rishi Shah, Shradha Agarwal, and Brad Purdy sold ad inventory they didn’t own and under-delivered on campaigns while still invoicing clients as if they had fully delivered.

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They lied to clients to hide the under-deliveries and inflated metrics of patient engagement with the screens. The scheme lasted from 2011 to 2017, overbilling clients by at least $45 million and overstating revenue for 2015 and 2016.

A federal jury convicted all three of them in April 2023. Shah was found guilty of mail fraud, wire fraud, bank fraud, and money laundering.

Shradha Agarwal was convicted of mail fraud, wire fraud, and bank fraud. Three other former employees pleaded guilty before the trial.