Chicago Billionaire Rishi Shah Gets 7.5-Year Sentence For Fraud

India-West News Desk

CHICAGO, IL – Former Outcome Health CEO Rishi Shah, once feted in the city, has been sentenced to 7½ years in prison for orchestrating a billion dollar fraud scheme that funded a lavish lifestyle featuring private aircraft and yachts.

US District Judge Thomas Durkin handed down the sentence on June 26 after a hearing for Shah and his co-defendants, former Outcome President Shradha Agarwal and former Chief Operating Officer Brad Purdy. Among other things, authorities will seize Shah’s $8 million mansion on the North Side of Chicago following his sentencing.

Shah,38, the son of a doctor, dropped out of Northwestern University to start a previous company which morphed into Outcome Health. Estimated to be several billion dollars worth by Forbes, the Indian-American’s flash it was found was all based on lies and fraund.

Outcome Health installed television screens and tablets in doctors’ offices nationwide and sold advertising space on these devices to clients, primarily pharmaceutical companies. Evidence presented at trial revealed that Shah, Agarwal, and Purdy sold advertising inventory the company did not have and then under-delivered on its advertising campaigns. Despite the under-deliveries, the company invoiced its clients as if it had delivered in full.

They lied or caused others to lie to conceal the under-deliveries from clients, creating the illusion that the company was meeting its contractual obligations. Purdy and others at Outcome also inflated metrics to show increased patient engagement with Outcome’s tablets. This scheme, which ran from 2011 to 2017, resulted in at least $45 million in overbilled advertising services, according to the Department of Justice.

The three were also convicted of defrauding Outcome’s lenders and investors. The under-delivery to advertising clients led to a significant overstatement of Outcome’s revenue for 2015 and 2016. Purdy caused others to fabricate data to hide the under-deliveries from the company’s outside auditor, who then signed off on the inflated revenue numbers. These inflated figures were used to raise $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017.

Shah was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering. Agarwal, who awaits sentencing was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud.

Earlier, three other former Outcome employees also pleaded guilty prior to the trial. Ashik Desai, the former chief growth officer, pleaded guilty to one count of wire fraud. Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud.