Former Outcome Health Executives Sentenced for $1 Billion Fraud Scheme

Former executives of Outcome Health, a Chicago-based health technology start-up, have been sentenced for their roles in a massive fraud scheme that targeted clients, lenders, and investors, resulting in approximately $1 billion in fraudulently obtained funds. The three executives, Rishi Shah, Shradha Agarwal, and Brad Purdy, were found guilty of deceiving clients, lenders, and investors by overbilling for advertising services and inflating revenue numbers.

Shah, the former CEO, was sentenced to seven years and six months in prison, while Agarwal, the former president, was sentenced to three years in a half-way house. Purdy, the former COO and CFO, received a sentence of two years and three months in prison. The executives were found to have sold advertising inventory the company did not have and under-delivered on advertising campaigns, while still invoicing clients as if they had delivered in full.

The scheme, which began in 2011 and lasted until 2017, resulted in at least $45 million of overbilled advertising services. The executives also defrauded lenders and investors by fabricating data to conceal the under-deliveries from the company’s auditor, resulting in inflated revenue figures used to raise millions in debt and equity financing.

The FBI and FDIC-OIG investigated the case, with assistance from the U.S. Securities and Exchange Commission. The executives were convicted on multiple counts of fraud and money laundering. Three other former employees also pleaded guilty to charges related to the scheme.

The sentencing of the Outcome Health executives serves as a reminder that fraudulent practices will not be tolerated, whether in a start-up or a well-established corporation. The case highlights the importance of holding companies and their executives accountable for their misconduct, and the commitment of law enforcement to deliver justice for victims of complex fraud schemes.