Rishi Shah, a Chicago businessman, and two former executives of Outcome Health, a Chicago-based health technology company, were convicted of a fraud scheme that targeted the company’s clients and lenders and involved approximately $1 billion in fraudulently obtained funds.
The individuals convicted by jury verdict today were Rishi Shah, 37, the co-founder and former CEO of Outcome Health, Shradha Agarwal, 37, the former president of Outcome Health, who was described as a co-founder, and Brad Purdy, 33, the former chief operating officer and chief financial officer.
Outcome Health installed television screens and tablets in doctors’ offices around the United States and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies. According to evidence presented at trial, Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns.
Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full. Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts.
The scheme targeting Outcome Health’s clients began in 2011, lasted until 2017, and resulted in at least $45 million of overbilled advertising services. Shah, Agarwal, and Purdy were also convicted of defrauding Outcome Health’s lenders and investors.
The under-delivery to Outcome Health’s advertising clients resulted in a material overstatement of Outcome Health’s revenue for the years 2015 and 2016. The company’s outside auditor signed off on the 2015 and 2016 revenue numbers because Purdy caused others to fabricate data to conceal the under-deliveries from the auditor.
Shah, Agarwal, and Purdy then used the inflated revenue figures in Outcome Health’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.
Shah, Agarwal, and Purdy lied to investors and lenders to conceal their ongoing under-delivery of advertising campaigns for clients. Shah and Purdy also misrepresented to investors the efficacy of Outcome Health’s advertising campaigns by concealing the fact that it had failed to meet return-on-investment commitments to clients.
Three other former employees of Outcome Health pleaded guilty prior to trial. Ashik Desai, the former chief growth officer pleaded guilty to one count of wire fraud; and Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud.
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. Agarwal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted on five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution.
Related Federal Cases
- Maurice L. Burks, Healthcare Fraud Scheme, East St. Louis IL, 2023 · Illinois
- Lisa Kaye Barwick-Majeski, Nigerian Fraud Scheme, MO, 2023 · Missouri
- Two Foreign Nationals, ID Theft Scheme, Los Angeles CA, 2023 · Florida
- Eric Holub, Tax Withholding Fraud, Cedar Rapids IA, 2023 · Illinois
- Terry L. Gantt, ID Theft and Wire Fraud, Cedar Rapids IA, 2012 · Illinois
Key Facts
- State: Illinois
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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