Outcome Health, a Chicago-based digital provider of medical information and advertising in doctors’ offices, has agreed to pay $70 million to victims of a fraud scheme that targeted its clients, lenders, and investors.
Outcome, a privately held company headquartered in Chicago, Illinois, admitted in resolution documents that from 2012 to 2017, former executives and employees of the company perpetrated a scheme to defraud its clients—most of which were pharmaceutical companies—by selling advertising inventory that it did not have.
‘Outcome Health deceived its lenders and investors, and overbilled its clients, by fraudulently misrepresenting both the quality and quantity of its advertising services and concealing those misrepresentations from auditors,’ said Principal Deputy Assistant Attorney General John P. Cronan. ‘Today’s resolution demonstrates the Criminal Division’s unyielding commitment to making whole victims of fraud.’
‘Outcome’s payment of $70 million is an appropriate resolution for the corporate entity given the misconduct of executives and employees acting on its behalf,’ said Assistant U.S. Attorney Brian Hayes, Chief of the Criminal Division for the Northern District of Illinois. ‘This resolution demonstrates that there are significant consequences for businesses whose executives and employees engage in fraud.’
‘For five years, employees of Outcome Health purposely failed to deliver on advertising campaigns and engaged in a pattern of misrepresentations to conceal their fraud,’ said Special Agent in Charge Emmerson Buie Jr. of the FBI’s Chicago Field Office. ‘This resolution demonstrates the FBI’s commitment to working with its prosecutorial and investigative partners to ensure that justice is done.’
Outcome admitted that as a result of its practice of selling clients inventory it did not have, it under-delivered on its advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full. To conceal the under-deliveries, Outcome employees at the time falsified affidavits and proofs of performance to make it appear the company was delivering advertising content to the number of screens in its clients’ contracts. Outcome executives and employees during that time also inflated patient engagement metrics regarding how frequently patients engaged with Outcome’s devices. Furthermore, an executive at the time altered a number of studies presented to clients to make it appear that the campaigns were more effective than they actually were, Outcome admitted.
Outcome further admitted that its under-delivery on advertising campaigns resulted in a material overstatement of its revenue for the years 2015 and 2016. The company’s outside auditor signed off on the 2015 and 2016 revenue numbers because executives and employees at the time fabricated data to conceal the under-deliveries from the auditor. Outcome used the inflated revenue figures in its 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, it admitted.
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Key Facts
- State: Illinois
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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