Outcome Health leaders convicted on federal fraud charges over info screens in medical offices
Jurors found three former leaders of a Chicago-based company guilty of multiple counts of fraud on Tuesday, after a 10-week federal trial that tracked Outcome Health's rise and dramatic fall. The leaders were accused of lying to customers and investors while taking in about $1 billion.
Jurors found 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.
The verdict caps the fall of an executive team led by Shah, who was close to Gov. J.B. Pritzker and a budding star in Democratic circles before fraud was revealed in a Wall Street Journal article in 2017.
The counts for all of three included mail fraud, wire fraud and bank fraud. Shas also was convicted on money laundering charges, while Purdy also was convicted of false statements to a financial institution.
Shah, Agarwal and Purdy have not been sentenced yet. Each bank fraud count carries a maximum penalty of 30 years in prison, while the wire and mail fraud counts can bring up to 20 years in prison. Money laundering carries up to a 10-year prison term, and the false-statements charge can bring 30 years.
Outcome Health targeted pharmaceutical companies, selling ads that would run on televisions and tablets that the company provided to doctors' offices and waiting rooms. Prosecutors alleged that the executives lied about how many doctors' offices the advertising would appear in, allowing them to overcharge advertisers and use inflated revenue figures to secure loans and investors.
Outcome had contracted in 2017 with the Edward-Elmhurst Health system in Naperville and Elmhurst to provide the screens with information and education that patients could view in waiting and exam rooms.
Defense attorneys for the three former executives argued that the blame should fall on another official who previously pleaded guilty to one count of wire fraud and testified against them. Prosecutors during the trial showed the defendants' communications with that person, Ashik Desai, arguing that it was proof that the three officials knew of problems within the company.
Separately, the Securities and Exchange Commission has charged the three former executives and Desai with fraud and has obtained a partial consent judgment against Desai in that case, which is pending, The Wall Street Journal reported. Outcome itself admitted that its former executives and employees defrauded clients and agreed to pay them $70 million as part of a 2019 deal to resolve federal fraud charges.
The company, which drew investments from major companies like Goldman Sachs and Alphabet Inc., grew from 16 employees in 2011 to more than 500 in 2017, when its value was estimated at more than $5 billion. Unlike most startup investments, a large amount was earmarked as a dividend for Shah and Agarwal: $225 million, the Journal reported.
Investors sued the company after the Journal revealed the fraud, and the case was settled when Shah and Agarwal agreed to leave their executive roles and give back $159 million of the money they received from the investment.
Outcome merged with rival PatientPoint in 2021.
A spokesman for Shah said Tuesday that he plans to appeal and "will exhaust every avenue to overturn this result."
An attorney for Purdy, Theodore Poulos, said they are "profoundly disappointed" with the verdict and reiterated his defense argument from trial that evidence showed "certain critical information was withheld" from Purdy.
Lawyers for Agarwal declined to immediately comment.