Three former Outcome Health executives who were convicted of fraud will likely be sentenced in the fall — with each facing possible decades of prison time.
Earlier this month, a jury found former Outcome co-founder and CEO Rishi Shah guilty on 19 counts, including fraud and money laundering. The jury found former co-founder and President Shradha Agarwal guilty on 15 counts, and it found Brad Purdy, the company’s former chief operating officer and chief financial officer, guilty on 13 counts, including fraud and lying to a financial institution.
Some of the counts carry up to 30 years in prison.
U.S. District Judge Thomas Durkin said, during a hearing Thursday, he’d like to see the sentencing hearings take place in October, and will work with lawyers to set specific dates in coming weeks. The three will be sentenced on different days, Durkin said. The sentencing will follow post-trial motions.
The verdict in the Outcome case came after a 10-week trial, in which government prosecutors accused Shah, Agarwal and Purdy of participating in a $1 billion fraud scheme.
Outcome Health placed TV screens and tablets in doctors’ waiting rooms and offices that played educational content and pharmaceutical ads, with drugmakers paying Outcome for running the ads. Prosecutors, however, alleged that the trio lied about how many doctors’ offices had screens and tablets running ads. Prosecutors said they then used those false numbers to overcharge drug companies for advertising, and inflate revenue figures used to get loans and raise money from investors.
During the trial, defense attorneys argued that a fourth former Outcome employee, Ashik Desai, was to blame for any fraud. They alleged that Desai fudged numbers and lied to his bosses about it.
Desai pleaded guilty to one count of wire fraud before the trial, and as part of an agreement with the government, Desai could get a reduced prison sentence for testimony he gave during the trial.
Ultimately, jurors sided with prosecutors who argued that Shah, Agarwal and Purdy knew Outcome was overcharging drug companies for ads, and wanted to ignore or fire employees who raised concerns.
Before the fraud allegations, Outcome was one of the most successful tech startups in Chicago. At one point, it had a reported valuation of more than $5 billion. Shah owned 80% of Outcome and 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.
A former Outcome analyst contacted the Wall Street Journal in 2017 with details of the alleged fraud, and the newspaper then published an article revealing the alleged problems at Outcome. Following that article, Outcome lost business, investors sued and Shah and Agarwal stepped down.
In 2019, Outcome, as a company, agreed to pay $70 million to pharmaceutical companies to resolve a federal fraud investigation. In March 2021, Outcome combined with company PatientPoint to create a new firm called PatientPoint Health Technologies.
Two other former Outcome employees, Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, also previously pleaded guilty to conspiracy to commit wire fraud. Desai, Choi and Han will be sentenced after Shah, Agarwal and Purdy are sentenced, Durkin said Thursday.
In addition to the criminal conviction, Shah, Agarwal and Purdy still face a lawsuit filed by the U.S. Securities and Exchange Commission over the fraud allegations.
