Three former Outcome Health executives were found guilty by a federal jury of participating in a $1 billion corporate fraud scam.
The Chicago-based health technology business set up tablets and digital displays in doctors’ offices and rented pharmaceutical companies advertising space on those displays. However, a 10-week federal trial revealed that Outcome’s executives falsified metrics, sold advertising inventory they did not own, and underdelivered on marketing initiatives.
The Department of Justice said in a statement on Tuesday that “despite these under-deliveries, the firm continued charged its clients as if it had delivered in whole.”
According to prosecution evidence, the scam that targeted Outcome’s clients reportedly ran from 2011 to 2017 and resulted in at least $45 million in overcharges for advertising services. An article from the Wall Street Journal published in 2017 first exposed the deception.
Found guilty were Rishi Shah and others
The jury found guilty of three executives this week, including:
Former CEO and co-founder Rishi Shah was found guilty on two counts of money laundering, two counts of bank fraud, two counts of wire fraud, five counts of mail fraud and ten counts of wire fraud.
Former president Shradha Agarwal was found guilty of two counts of bank fraud, eight counts of wire fraud, and five counts of mail fraud.
Former COO and CFO Brad Purdy was found guilty on five charges of mail and wire fraud, five counts of bank fraud, two counts of false statements to a financial institution, and one count of false statements to a financial institution.
Although the three have not received a punishment, they could spend years in jail.
Prior to the trial, three other former Outcome workers entered guilty pleas:
Former Chief Growth Officer Ashik Desai admitted guilt to one count of wire fraud.
Former senior analyst Kathryn Choi admitted to conspiring to conduct wire fraud.
Former analyst Oliver Han admitted to conspiring to conduct wire fraud.
The Securities and Exchange Commission also charged Shah, Agarwal, Purdy, and Desai with fraud in 2019.
exceeding the company’s revenue
The three executives were also found guilty of overstating the company’s revenue in 2015 and 2016 in order to deceive Outcome’s lenders and investors.
Purdy, according to the Justice Department, “fabricated statistics to disguise the under-delivery from the auditor.” Outcome later raised $475 million through two rounds of loan financing in 2016 and $487.5 million in equity financing in 2017 using the overstated sales estimates.