A jury is now deciding the fates of three former Chicago tech scene stars accused of perpetrating a $1 billion fraud scheme by lying to investors, lenders and clients.
The jury began deliberations Wednesday afternoon after nearly 10 weeks of arguments and testimony in the criminal trial against former Outcome Health CEO Rishi Shah, former Outcome President Shradha Agarwal and former Outcome Chief Operating Officer and Chief Financial Officer Brad Purdy.
The jury is tasked with deciding whether to find the three guilty on charges of mail fraud, wire fraud and bank fraud. Shah also stands accused of money laundering, and Purdy of making false statements to a financial institution.
Some of the charges carry sentences of up to 30 years in prison. All three have pleaded not guilty to the charges against them.
The three once led a company that was celebrated as a local tech success story. Outcome sold advertising to pharmaceutical companies, with the ads running on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms. Outcome grew from a 16-employee operation in 2011 to a company with more than 500 employees and a reported valuation of more than $5 billion by 2017.
Shah, who owned 80% of Outcome, was named to the Forbes 400 ranking of richest Americans in 2017, with a net worth of $3.6 billion at the age of 31. Agarwal owned 20% of the company.
Federal prosecutors, however, allege that Outcome’s success was built on lies. Prosecutors allege that Shah, Agarwal and Purdy lied about how many doctors’ offices had screens and tablets running their content and then used those false numbers to overcharge drug companies for advertising, and inflate revenue figures used to get loans and raise money from investors.
Throughout the trial, defense attorneys and prosecutors focused much of their firepower on a fourth former executive, Ashik Desai. The defense argued that Desai was the mastermind behind the fraud, and left his bosses in the dark about his misdeeds.
Desai has already pleaded guilty to one count of wire fraud. Desai testified earlier in the trial that he concealed from Shah, Agarwal and Purdy falsified screen shots and return-on-investment reports.
“The real story from this trial is that Outcome was making it until Desai arrived and began faking it,” said John Hueston, an attorney for Shah, during closing arguments. “The company was making it until the revelation of Mr. Desai’s fraud unraveled it all.”
Hueston referred to Desai and his team of analysts as “fraud island,” saying they acted without the defendants’ direction. Agarwal’s attorney argued that she wasn’t significantly involved in the company’s finances or sales, instead focusing on content, hiring and other areas. An attorney for Purdy argued that Purdy was young and without accounting experience, despite his title of chief financial officer, and that he should not be found guilty just because of his titles. Hueston argued that Shah trusted Desai and was repeatedly reassured by him that everything was above-board.
Government prosecutors, meanwhile, argued that Desai was following his bosses’ lead. Government prosecutor Matthew Madden said the idea that Desai acted without his bosses’ blessing is a fiction. Desai was 20 years old when he joined the company in 2013.
“You learned about a place called fraud island which was supposedly first inhabited by a 20-year-old criminal mastermind,” Madden told the jury during his rebuttal Wednesday. “The story was the 20-year-old criminal mastermind betrayed his bosses by telling them a bunch of lies that made his bosses enormously rich.”
Prosecutors showed jurors communications involving Purdy, including one in which Desai told him about “heavily inflated” metrics related to ads running on tablets and another in which an analyst told him that certain tablet metrics were “not real.” Purdy’s attorney Theodore Poulos argued that Purdy had no reason to think those communications were red flags about widespread fraud, given that others at the company had reassured him that the overall numbers were solid.
Prosecutors also showed the jury a series of messages between Shah and Agarwal discussing how to handle an executive and several employees who were raising concerns about Outcome’s business practices. In those communications, they discuss the possibility of firing those employees. The executive ultimately confronted Shah about the problems in January 2017, and left the company after only three weeks on the job.
Defense attorneys argued that Outcome leaders had genuine concerns about that executive’s fit with the company’s culture, and that their clients had been reassured by Desai about the company’s practices.
The points were among many made throughout the course of a trial, which included about 1,500 exhibits, and testimony from former Outcome employees and others. Purdy’s attorney, Poulos, called it an “enormous and complex case.”
Jurors now will have to consider whether each defendant is guilty of each of a number of counts against them. To find them guilty of fraud, jurors must decide that they committed fraud beyond a reasonable doubt, and that they did so knowingly and with intent to defraud.
