2 Indian-Americans sentenced for $1 billion fraud at the US health firm

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NEW YORK, July 2: Two India-origin people, the former executives of a Chicago-based health technology start-up, Outcome Health, have been sentenced for their involvement in a massive fraud scheme that targeted the company’s clients, lenders, and investors. The US Department of Justice reported that the fraudulent activities involved approximately $1 billion (Rs 7500 crore) in fraudulently obtained funds.

The convicted individuals are 38-year-old Rishi Shah, the co-founder and former CEO of Outcome Health, and 38-year-old Shradha Agarwal, the co-founder and former president of the company. Alongside them, 35-year-old Brad Purdy, the former chief operating officer and chief financial officer of Outcome Health, was also sentenced.

Rishi Shah was sentenced on June 26 to seven years and six months in prison. Shradha Agarwal received a sentence on June 30 of three years in a halfway house. Brad Purdy was sentenced on the same day to two years and three months in prison.

Outcome Health, founded in 2006 and known as Context Media before January 2017, installed television screens and tablets in doctors’ offices across the United States. They sold advertising space on these devices, primarily to pharmaceutical companies. However, court documents and trial evidence revealed that Shah, Agarwal, and Purdy sold advertising inventory that the company did not own and under-delivered on its advertising campaigns. Despite these under-deliveries, they invoiced clients as if the services had been fully delivered.

According to the case’s official release, Shah, Agarwal, and Purdy misled clients to conceal the under-deliveries and made it appear as if the company was delivering the contracted advertising content. They also inflated metrics to falsely demonstrate patient engagement with Outcome’s tablets in doctors’ offices.

The fraud scheme, which began in 2011 and continued until 2017, resulted in at least $45 million in overbilled advertising services. The inflated metrics led to a material overstatement of Outcome’s revenue for 2015 and 2016, defrauding the company’s lenders and investors.

In April 2023, a federal jury convicted Shah, Agarwal, and Purdy. Shah was found guilty of five counts of mail fraud, ten 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. Additionally, three other former Outcome employees pleaded guilty before the trial.

The sentencing of these former executives marks a significant step in addressing the large-scale fraud that impacted numerous clients and investors.

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