April 10, 2020
By Caity Witucki
Contributing Editor, Fraud Friday
Fraud Friday – Former Outcome Health Executives Indicted for $1 Billion Fraud Scheme
Outcome Health’s former executives, Rishi Shah, Shradha Agarwal, Brad Purdy and Ashik Desai are facing criminal charges for their alleged involvement in a $1 billion financial fraud scheme. Two Outcome Health employees have also been indicted under the presumption that they had knowledge of the scheme.
Until recently, Outcome Health’s executives were stars in Chicago’s tech scene. CEO and founder, Rishi Shah made Forbes list of richest Americans in 2017 with a net worth of $3.6 billion. His newfound success caught the attention of numerous investors and lead to plans of putting the company’s name on a skyscraper. However, a recent investigation conducted by the FBI and FDIC-OIG suggests that the company may owe its success to fraud.
According to Outcome Health’s website, the company installs screens in doctor’s offices and waiting rooms that combine health information with drug advertising. Pharmaceutical companies then pay Outcome Health to run ads and other content on the screens. However, around 2011, the company allegedly began selling phony advertising inventory and misrepresenting the success of advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full.
In 2016, Outcome Health applied for two loans, one for $110 million and another for $375 million. On both loans, Outcome Health allegedly provided fake financial statements that reflected materially inflated revenue and hid the company’s recent under-delivery. A few months later, Outcome Health also requested a $487.5 million capital raise from investors. Relying on the phony financial statements, the investors and lenders dispersed the funds.
In October 2017, The Wall Street Journal reported that Outcome Health’s employees provided inflated data to pharmaceutical companies. As a result of the allegations in the article, Goldman Sachs and Google, both of which were investors, sued Outcome Health and the FBI opened a fraud investigation.
Although the civil case brought by the investors was settled out of court, $10.3 million linked to the fraud remains frozen in Shah and Agarwal’s accounts. The former executives petitioned the court this week to use the frozen funds to pay their attorneys’ fees, but the request was denied.
Due to the coronavirus pandemic, the former executives’ trial date has not yet been set.