Ex-Outcome Health CEO Rishi Shah gets 7 ½ years’ jail for fraud

Shah, co-founder Shradha Agarwal and former COO Brad Purdy were found guilty of fraud 14 months ago

By DesiMax Wire

Rishi Shah, former Indian American CEO and co-founder of Outcome Health has been sentenced to 7 ½ years in prison, more than a year after he was found guilty of fraud.

Before sentencing Shah on Wednesday, US District Judge Thomas Durkin told him the fraud was “not a single mistake or out-of-character impulsive moment,” the Chicago Tribune reported. “A lot of this I believe was driven by greed … dreams of being a big shot,” Durkin said.

Government prosecutors had asked Durkin to give Shah 15 years in prison, calling him “the architect” of a $1 billion fraud. The US Probation Office had recommended eight years, according to a memo filed by Shah’s attorneys, and his attorneys had asked for home confinement.

Shah, 38, has already retained former acting Indian American US Solicitor General Neal Katyal to appeal his conviction. Shah also plans to appeal his sentence, according to the Tribune.

Shah spoke to the judge before sentencing Wednesday saying he’s “deeply sorry” for those who trusted him with their money and careers. In my head and heart I feel tremendous responsibility for what happened at Outcome Health,” Shah was quoted as saying.

RELATED: Two former Indian American executives convicted in $1 billion scam (April 12, 2023)

The sentencing Wednesday came about 14 months after a jury found Shah and two other former Outcome leaders — co-founder and former President Shradha Agarwal and former Chief Operating Officer and Chief Financial Officer Brad Purdy — guilty of fraud. The jury convicted Shah on 19 of 22 counts against him.

Agarwal and Purdy are also scheduled to be sentenced this week. Shah told the judge Wednesday, “I have profound remorse for how my failures have harmed Shradha and Brad.”

Shah and his once-celebrated Chicago-based company, Outcome, had a meteoric rise and even more dramatic fall, according to the Tribune. The company, conceived while Shah was a student at Northwestern University, sold advertising to pharmaceutical companies and ran those ads on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms.

During the trial last year, government prosecutors alleged that Shah, Agarwal and Purdy lied about how many doctors’ offices had screens and tablets running their content. Prosecutors said they then used those false numbers to overcharge drug companies for ads, and inflated revenue figures used to raise money from investors and secure loans.

Outcome raised nearly $1 billion from lenders and high-profile investors. By 2017, Outcome had more than 500 workers and was one of the most talked-about tech companies in Chicago. Shah, who owned 80% of Outcome, was named to the Forbes 400 ranking of richest Americans in 2017, with a net worth of $3.6 billion at the age of 31.

Outcome’s downfall, however, began when a former Outcome analyst contacted The Wall Street Journal, which ran an article in 2017 detailing the alleged problems at Outcome.

The company lost business, investors sued and Shah and Agarwal stepped down. In 2019, Outcome, as a company, agreed to pay $70 million to pharmaceutical companies to resolve a federal fraud investigation, and Outcome settled with investors and lenders in 2018. The criminal fraud trial last year focused on Outcome’s three top executives as individuals.

During the trial, defense attorneys blamed the problems at Outcome on a fourth former Outcome employee, Ashik Desai. Desai pleaded guilty to one count of wire fraud before the trial, and he testified that he falsified screen shots and return-on-investment reports without his bosses’ knowledge. Ultimately, the jury didn’t buy that Desai was solely responsible for the fraud at Outcome, according to the Tribune.

As part of an agreement with the government, Desai could get a reduced prison sentence for testifying at the trial last year. Desai is scheduled to be sentenced in September, the newspaper said.

Shah, Agarwal and Purdy were supposed to be sentenced in fall 2023, but their sentencing hearings were repeatedly rescheduled as Shah and Agarwal argued that they weren’t able to hire their first choice of lawyers for the trial because too much of their money was frozen before the trial began.

Earlier this month, Durkin denied Shah and Agarwal’s motions for a new trial or dismissal of the indictment against them.