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Saturday, June 3, 2023

Outcome Health Scandal: Former Executives Face Consequences for Fraud in US

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A federal jury in the US found two Indian-origin executives of a Chicago-based start-up guilty of orchestrating a USD 1 billion corporate fraud conspiracy that was directed at the company’s customers, lenders, and investors.

After a 10-week trial, the jury convicted Outcome Health co-founder and former CEO Rishi Shah, co-founder and former president Shradha Agarwal, and former chief operating officer Brad Purdy guilty on 19 of 22 charges, 15 of 17 counts, and 13 of 15 counts, respectively.

The maximum sentence for each case of bank fraud against the defendants is 30 years in prison, and each count of wire fraud and mail fraud carries a potential sentence of 20 years in jail. The maximum sentence for Shah for each count of money laundering is ten years in jail.

The company’s clients were the target of a scam that started in 2011, ran until 2017, and cost at least USD 45 million in overcharged advertising services.

Additionally found guilty of cheating the company’s lenders and investors were Shah, Agarwal, and Purdy. The company’s revenue for the years 2015 and 2016 were materially overstated as a result of the under-delivery to the company’s advertising clients.

Shah, Agarwal, and Purdy raised USD 110 million in debt financing in April 2016, USD 375 million in loan financing in December 2016, and USD 487.5 million in equity financing in early 2017 by inflating the company’s sales statistics in its audited financial accounts for the years 2015 and 2016.

The conviction was shocking for the three, who were once rising stars in Chicago’s IT sector, and it may have repercussions for other members of the industry.

Ashik Desai, Kathryn Choi, and Oliver Han were three further former Outcome workers who entered guilty pleas before going to trial. Desai, Choi, and Han’s sentences will be handed out later.

Taushif Patel
Taushif Patelhttps://taushifpatel.com
Taushif Patel is a Author and Entrepreneur with 20 years of media industry experience. He is the co-founder of Target Media and publisher of INSPIRING LEADERS Magazine, Director of Times Applaud Pvt. Ltd.

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