The former CEO of the once lauded Chicago tech start-up Outcome Health did not commit fraud but rather trusted the wrong person, a defense attorney argued Wednesday morning, as closing arguments continued in the trial of three former company executives.
After more than seven hours of closing arguments from a government prosecutor, the defense began its turn Wednesday giving closing arguments in the criminal trial against former Outcome CEO Rishi Shah, former President Shradha Agarwal and former Chief Operating Officer and Chief Financial Officer Brad Purdy. The trial is now in its ninth week, with jurors expected to start deliberating in coming days once closing arguments conclude.
Prosecutors allege that the three former rising stars led a $1 billion fraud scheme, bilking drug companies, lenders and investors out of cash.
Outcome was once one of the most celebrated start-ups in Chicago, at one point rising to a reported valuation of more than $5 billion. The company sold advertising to pharmaceutical companies, with the ads running on TVs and tablets that Outcome placed in doctors’ offices and waiting rooms.
Federal prosecutors, however, 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.
Shah, Agarwal and Purdy now face 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. All three have pleaded not guilty to the charges, some of which carry sentences of up to 30 years in prison.
Throughout the trial, the defense has argued that one man, former executive Ashik Desai, was the mastermind behind the fraud. Desai has already pleaded guilty to one count of wire fraud, and spent more than two weeks testifying earlier in the trial about his actions and those of the defendants.
John Hueston, a defense attorney for Shah, hammered on that point Wednesday morning, showing multiple examples of times Desai assured Shah that everything was above board.
“He’s lulling Mr. Shah into thinking there’s no fraud,” Hueston said. He reminded jurors that Desai testified earlier in the trial that he faked screenshots of screens running ads for clients and falsified return-on-investment reports and certain metrics without any direction to do so from above.
“You can’t be in a scheme to defraud someone if that person is hiding the fraud from you,” Hueston said. “How does that work exactly? The answer is that doesn’t work.”
Hueston’s arguments came after the prosecution spent much of Tuesday showing communications between Shah and Desai that seemed to show that Shah was aware that ads weren’t being shown on as many screens as had been promised to drug company clients. The prosecution also showed emails between Shah and Agarwal — from before Desai arrived at the company — about giving pharmaceutical companies lists of offices where their ads could run that included offices with no screens. The prosecution argued those emails showed that the fraud pre-dated Desai, and Desai was following his bosses’ lead in committing the fraud.
Hueston, however, on Wednesday, showed examples of times when Shah indicated that clients should be told that some of the offices included in lists of where their ads could be played were based on projections or averages.
Hueston also focused on testimony from earlier in the trial of Jason Ketchum, Outcome’s former senior director of promotional strategy. He noted that Ketchum, who began working at Outcome years before Desai, testified that he did not teach Desai how to commit the fraud and that he was never told, during his time, to conceal from clients the fact that lists of offices with screens were based partly on projections. Ketchum was given immunity for his testimony.
“Did Mr. Shah commit errors? He sure did. Lapses in judgement? Yes. … But these are not the questions you are here to answer,” Hueston told the jury. “The question you’re here to answer is did Mr. Shah concoct a scheme to defraud starting with Mr. Ketchum in the early years and then handed off to Mr. Desai in the later years? … The answer to that, ladies and gentlemen, is a resounding no.”
Closing arguments by defense attorneys, including for defendants Shah and Agarwal, are expected to continue into Monday.
Outcome, as a company, has already faced a number of legal actions, following a 2017 Wall Street Journal article that exposed the alleged fraud. In March 2021, Outcome combined with company PatientPoint to create a new firm called PatientPoint Health Technologies.
