Chicago-based Outcome Health and the company’s executives have been embroiled in a severe $1bn fraud case. The health technology start-up’s three senior executives, Rishi Shah, Shradha Agarwal, and Brad Purdy, have all been sentenced.
They have been found guilty of exploiting the clients, lenders, and investors who trusted the company.
Outcome Health execs sentenced
Outcome Health started as Context Media in 2006, providing pharmaceutical companies with advertising opportunities. These were promoted across doctors’ surgeries and devices across America.
According to court documents and evidence, the three executives were found guilty of misleading investors. Shah, Agarwal, and Purdy offered advertising spaces that they could not deliver on but did not inform clients or those involved in the official reporting of documentation.
Furthermore, the court found that despite Shah, Agarwal, and Purdy’s inability to deliver the charged-for services, they still invoiced as if this service had been provided.
“This was an elaborate, billion-dollar fraud scheme by three people who were supposed to be leaders of the company,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response, and Services Branch. “Instead, these now former executives attempted to illegally line their own pockets.
Advertising figures cooked by executives
Over $45 million in overbilled advertising was charged to Outcome Health’s clients. The executives forced colleagues to lie about the sales figures, and Shah, Agarwal, and Purdy cooked the metrics and reportage figures to present a healthier balance.
The Justice Department court report highlighted that inflated revenue figures in the company’s 2015 and 2016 audited financial statements intended “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. The $110 million debt financing resulted in a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal, and the $487.5 million in equity financing resulted in a $225 million dividend that benefited Shah and Agarwal.”
The three were convicted in April 2023. Shah was sentenced on June 26 to seven years and six months in prison, Agarwal to three years in a halfway house, and Purdy to two years and three months in prison.
Assistant Inspector General for Investigations Shimon R. Richmond of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) gave their final points on the sentencing.
“The defendants in this case have been brought to justice for their actions in deceiving Outcome Health’s clients and fraudulently obtaining approximately $1 billion from its lenders and investors.”
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