Three former officials of the Results Health (Outcome), a Chicago-based health technology start-up company, was sentenced for his role in a fraud scheme that targeted the company’s customers, lenders, and investors and involved nearly $1 billion in fraudulently obtained funds. The startup’s investors included Goldman Sachs Group, Google The company is a venture capital firm of parent company Alphabet Inc. and Illinois Governor JB Pritzker.
, Rishi ShahOutcome’s co-founder and former CEO, 38, was sentenced on June 26 to seven years and six months in prison.
, Shraddha AgarwalOutcome’s co-founder and former chairman, 38, was sentenced yesterday to three years in a halfway house.
, Brad PurdyOutcome’s former chief operating officer and chief financial officer, 35, was also sentenced to two years and three months’ jail yesterday.
“Outcome’s former executives defrauded their customers, their auditors, their lenders, and their investors for years,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Their sentences should serve as another reminder that ‘fake it till you make it’ is not an acceptable practice for any business, whether that company is a technology start-up or a well-established corporation. Lying about your revenues to obtain customers or financing is clearly and obviously fraudulent. The Criminal Division is committed to holding companies and their executives accountable for their misconduct.”
“The defendants’ massive scheme defrauded the customers, investors, and lenders who supported their business,” said Morris Pascal, Acting U.S. Attorney for the Northern District of Illinois. “Although they tried to conceal the fraud by silencing whistleblowers and deceiving auditors, the jury rightly held the defendants accountable for their extensive fraud scheme. Our office will continue to work tirelessly with our law enforcement partners to bring justice to the victims of complex fraud schemes.”
According to court documents and evidence presented at trial, Outcome, founded in 2006 and known as Context Media before January 2017, placed television screens and tablets in doctors’ offices across the United States and then sold advertising space on those devices to clients, mostly pharmaceutical companies. Shah, Agrawal, and Purdy sold Outcome’s clients advertising inventory that the company did not have and then under-delivered on its ad campaigns. Despite these under-deliveries, the company still billed its clients as if it had made full deliveries. Shah, Agrawal, and Purdy lied to clients, or asked others to lie, to conceal the under-delivery and make it appear that the company was delivering advertising content according to the number of screens in clients’ contracts. Purdy and others at Outcome also inflated metrics that claimed to show how often patients engaged with Outcome’s tablets placed in doctors’ offices. According to trial evidence, the scheme targeting Outcome’s customers began in 2011 and lasted until 2017, and resulted in at least $45 million in overbilling for advertising services.
“This was an elaborate, billion-dollar fraud scheme perpetrated by three people who should have been the company’s leaders,” said Timothy Lagon, executive assistant director of the FBI’s Criminal, Cyber, Response and Services Branch. “Instead, these now former executives attempted to illegally line their own pockets. This type of fraud and abuse drains vital resources from our healthcare system, and the FBI will always work closely with our law enforcement partners to investigate and prosecute anyone who intends to defraud the American public.”
Shah, Agarwal, and Purdy also defrauded Outcome’s lenders and investors. Outcome’s revenue for the years 2015 and 2016 was greatly inflated as a result of underdelivery to Outcome’s advertising customers. The company’s external auditor signed off on the 2015 and 2016 revenue figures because Purdy induced others to fabricate the data to conceal the underdelivery from the auditor. Shah, Agarwal, and Purdy then used the inflated revenue figures in Outcome’s 2015 and 2016 audited financial statements 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 $7.5 million to Agarwal, and the $487.5 million equity financing resulted in a $225 million dividend, benefiting Shah and Agarwal.
“The defendants in this case have been brought to justice for defrauding Outcome Health’s customers and fraudulently obtaining nearly $1 billion from its lenders and investors,” said Simeon R. Richmond, Assistant Inspector General for Investigations for the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG). “The FDIC-OIG will continue to work with our law enforcement partners to hold accountable individuals who commit fraudulent acts such as these and cause harm to lenders, investors and customers.”
A federal jury convicted Shah, Agrawal, and Purdy in April 2023. 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. Agrawal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of making a false statement to a financial institution.
Three other former Outcome employees pleaded guilty before the hearing. Former chief development officer Ashik Desai pleaded guilty to one count of wire fraud. Former senior analyst Katherine Choi and former analyst Oliver Han both pleaded guilty to conspiracy to commit wire fraud. Desai will be sentenced on Sept. 20. Choi and Han will be sentenced on Oct. 4 and Oct. 11, respectively.
The FBI and the FDIC-OIG investigated the case. The U.S. Securities and Exchange Commission provided assistance in the case.
Assistant Chief Kyle C. Hankey of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason Yonan, Corey Rubenstein, and William Hogan of the Northern District of Illinois prosecuted the case. Former Assistant Chief William E. Johnston of the Criminal Division’s Fraud Section and former Assistant U.S. Attorneys Matthew F. Madden and Sourish Appleby-Bhattacharyya of the Northern District of Illinois also prosecuted the case through trial.
, Rishi ShahOutcome’s co-founder and former CEO, 38, was sentenced on June 26 to seven years and six months in prison.
, Shraddha AgarwalOutcome’s co-founder and former chairman, 38, was sentenced yesterday to three years in a halfway house.
, Brad PurdyOutcome’s former chief operating officer and chief financial officer, 35, was also sentenced to two years and three months’ jail yesterday.
“Outcome’s former executives defrauded their customers, their auditors, their lenders, and their investors for years,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Their sentences should serve as another reminder that ‘fake it till you make it’ is not an acceptable practice for any business, whether that company is a technology start-up or a well-established corporation. Lying about your revenues to obtain customers or financing is clearly and obviously fraudulent. The Criminal Division is committed to holding companies and their executives accountable for their misconduct.”
“The defendants’ massive scheme defrauded the customers, investors, and lenders who supported their business,” said Morris Pascal, Acting U.S. Attorney for the Northern District of Illinois. “Although they tried to conceal the fraud by silencing whistleblowers and deceiving auditors, the jury rightly held the defendants accountable for their extensive fraud scheme. Our office will continue to work tirelessly with our law enforcement partners to bring justice to the victims of complex fraud schemes.”
According to court documents and evidence presented at trial, Outcome, founded in 2006 and known as Context Media before January 2017, placed television screens and tablets in doctors’ offices across the United States and then sold advertising space on those devices to clients, mostly pharmaceutical companies. Shah, Agrawal, and Purdy sold Outcome’s clients advertising inventory that the company did not have and then under-delivered on its ad campaigns. Despite these under-deliveries, the company still billed its clients as if it had made full deliveries. Shah, Agrawal, and Purdy lied to clients, or asked others to lie, to conceal the under-delivery and make it appear that the company was delivering advertising content according to the number of screens in clients’ contracts. Purdy and others at Outcome also inflated metrics that claimed to show how often patients engaged with Outcome’s tablets placed in doctors’ offices. According to trial evidence, the scheme targeting Outcome’s customers began in 2011 and lasted until 2017, and resulted in at least $45 million in overbilling for advertising services.
“This was an elaborate, billion-dollar fraud scheme perpetrated by three people who should have been the company’s leaders,” said Timothy Lagon, executive assistant director of the FBI’s Criminal, Cyber, Response and Services Branch. “Instead, these now former executives attempted to illegally line their own pockets. This type of fraud and abuse drains vital resources from our healthcare system, and the FBI will always work closely with our law enforcement partners to investigate and prosecute anyone who intends to defraud the American public.”
Shah, Agarwal, and Purdy also defrauded Outcome’s lenders and investors. Outcome’s revenue for the years 2015 and 2016 was greatly inflated as a result of underdelivery to Outcome’s advertising customers. The company’s external auditor signed off on the 2015 and 2016 revenue figures because Purdy induced others to fabricate the data to conceal the underdelivery from the auditor. Shah, Agarwal, and Purdy then used the inflated revenue figures in Outcome’s 2015 and 2016 audited financial statements 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 $7.5 million to Agarwal, and the $487.5 million equity financing resulted in a $225 million dividend, benefiting Shah and Agarwal.
“The defendants in this case have been brought to justice for defrauding Outcome Health’s customers and fraudulently obtaining nearly $1 billion from its lenders and investors,” said Simeon R. Richmond, Assistant Inspector General for Investigations for the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG). “The FDIC-OIG will continue to work with our law enforcement partners to hold accountable individuals who commit fraudulent acts such as these and cause harm to lenders, investors and customers.”
A federal jury convicted Shah, Agrawal, and Purdy in April 2023. 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. Agrawal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of making a false statement to a financial institution.
Three other former Outcome employees pleaded guilty before the hearing. Former chief development officer Ashik Desai pleaded guilty to one count of wire fraud. Former senior analyst Katherine Choi and former analyst Oliver Han both pleaded guilty to conspiracy to commit wire fraud. Desai will be sentenced on Sept. 20. Choi and Han will be sentenced on Oct. 4 and Oct. 11, respectively.
The FBI and the FDIC-OIG investigated the case. The U.S. Securities and Exchange Commission provided assistance in the case.
Assistant Chief Kyle C. Hankey of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason Yonan, Corey Rubenstein, and William Hogan of the Northern District of Illinois prosecuted the case. Former Assistant Chief William E. Johnston of the Criminal Division’s Fraud Section and former Assistant U.S. Attorneys Matthew F. Madden and Sourish Appleby-Bhattacharyya of the Northern District of Illinois also prosecuted the case through trial.
