Fraud Convictions Upheld
The appellate court has confirmed the fraud convictions for two former executives from Outcome Health, a tech company previously based in Chicago. This decision was issued by a three-judge panel from the 7th U.S. Circuit Court of Appeals. The panel supported a jury’s previous decision from three years ago, which convicted the executives on numerous fraud counts.
Details of the 2023 Trial
In a trial lasting ten weeks in 2023, co-founder and ex-CEO Rishi Shah and co-founder and former President Shradha Agarwal were found guilty. Shah faced 19 counts, while Agarwal faced 15. In 2024, Shah received a prison sentence of seven and a half years. Agarwal was sentenced to three years at a halfway house. Both executives have remained free during their appeals.
The Company’s Background and Rise
Outcome Health was once a leading player in Chicago’s tech industry. It sold advertising to pharmaceutical firms, showcasing ads on TVs and tablets installed in doctors’ offices and waiting rooms. The company’s workforce expanded from 16 employees in 2011 to over 500 in 2017. Its valuation was reported at over $5 billion. The company attracted nearly $1 billion in investments from entities like a fund co-founded by Gov. JB Pritzker, along with units of Goldman Sachs and Google.
Allegations and Trial Revelations
Outcome’s rapid growth halted after a former analyst alerted the Wall Street Journal about misleading practices in the company. The trial in 2023 revealed that Shah, Agarwal, and a third executive, Brad Purdy, allegedly fabricated data on the presence of screens and tablets in clinics. Prosecutors claimed they exaggerated these figures to overcharge pharmaceutical businesses and inflate revenue numbers for loans and investments. While Purdy was also convicted, he did not appeal in this recent decision.
Defense Challenges and Court’s Response
Shah and Agarwal challenged their convictions partly by arguing that the government improperly froze their assets, hindering their ability to hire preferred legal representation. The government acknowledged that some frozen assets were unrelated to the fraud. Nonetheless, the appellate court found that enough information was provided to challenge this before the original trial.
The court expressed disappointment over the lack of consequences for the government’s wrongful restraint of Shah’s defense funds, as mentioned by Shah’s attorney, Richard Finneran.
The court also emphasized that Shah and Agarwal continued to induce contracts and sought financial backing with unsubstantiated financial data, knowing their inability to deliver as promised.
Efforts to reach Agarwal’s attorney were unsuccessful.