Indian-American businessman Rishi Shah has been sentenced to seven and a half years in prison for orchestrating a ₹ 8,300 crore ($1 billion) fraud scheme. The former billionaire and co-founder of Outcome Health, a Chicago-based health tech firm, defrauded investors including Goldman Sachs Group Inc., Google parent Alphabet Inc., and Illinois Governor JB Pritzker’s venture capital firm.
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Rishi Shah aged 38, co-founder and former CEO of Outcome Health received a sentence of seven and a half years in prison.
Shradha Agarwal, also 38, co-founder and former president of Outcome Health was sentenced to three years in a halfway house.
Brad Purdy, the former Chief Operating Officer and Chief Financial Officer received a prison sentence of two years and three months.
The fraud scheme involved Outcome Health selling advertising inventory that did not exist and under-delivering on its commitments to clients.
The company provided advertising space on television screens and tablets installed in doctors’ offices across the United States but failed to deliver the agreed-upon content.
Outcome Health invoiced clients as if the campaigns were delivered in full, inflating their revenue reports.
The fraudulent activities led to the acquisition of approximately $1 billion in funds through deceitful practices.
The scam affected Outcome Health’s clients, most of whom were pharmaceutical companies by overbilling them for advertising services that were never fully provided.
Investors and lenders were also misled by inflated financial statements and false metrics that misrepresented the company’s performance.
Outcome Health was founded in 2006 by Rishi Shah, then a university student, as Context Media Health.
Throughout the 2010s Outcome Health quickly rose to prominence by becoming a player in tech and healthcare investment sectors.
The company attracted investments from big firms by its promise to integrate advanced technology with traditional healthcare marketing. By mid-2010s, Rishi Shah was considered a rising star in Chicago’s corporate circles.
The company sold more advertising inventory than it could deliver, misleading clients about the impact of their ad campaigns.
Outcome Health provided falsified data, creating the illusion of reach and huge revenue growth. Pharmaceutical giant Novo Nordisk A/S and other major clients were deceived about the network size and advertising reach.
Rishi Shah utilized the inflated revenue from fraudulent ad sales to fund a luxurious lifestyle including exotic trips, private jets, yachts and purchasing a $10 million home.
In 2016, Rishi Shah’s net worth was estimated at over $4 billion, a figure inflated by deceptive accounting practices.
The scheme began to unravel in 2017 following an exposé by the Wall Street Journal, which highlighted the fraudulent activities at Outcome Health.
Major investors including Goldman Sachs, Alphabet and JB Pritzker’s firm, filed lawsuits accusing Outcome Health of fraudulent misrepresentation in a $487.5 million fundraising round earlier that year.
Rishi Shah was indicted on multiple counts of fraud and money laundering. His co-conspirators, Shradha Agarwal and CFO Brad Purdy also faced charges. In April 2023, Shah, Agarwal and Purdy were convicted on various charges related to the fraud scheme.
Rishi Shah was sentenced to seven and a half years in prison by US District Judge Thomas Durkin. Shradha Agarwal received a three-year sentence in a halfway house.
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Brad Purdy sentenced to two years and three months in prison. The US Securities and Exchange Commission has also filed a civil suit against Shah, Agarwal, Purdy and former chief growth officer Ashik Desai.
Rishi Shah expressed remorse and accepted responsibility acknowledging his failure in managing the aggressive expansion of Outcome Health and fostering a deceptive corporate culture.
He apologized for creating an environment that allowed for false data and misrepresentation in response to client inquiries.
Rishi Shah, the son of an Indian immigrant doctor grew up in Oak Brook, a Chicago suburb and was educated at Harvard and Northwestern University where he met Agarwal.
The duo initially founded Context Media, later acquiring AccentHealth in 2016 renaming the combined entity Outcome Health.
Outcome Health sold ad slots to pharmaceutical companies for display on devices in doctors’ offices targeting patients with health-related advertisements.
Outcome Health originally known as Context Media was founded in 2006 by Rishi Shah while he was a student at Northwestern University.
The company gained prominence attracting huge investment from big firms such as Goldman Sachs, Alphabet and the Pritzker Group. The fraud was exposed in 2017 following an investigation by the Wall Street Journal.
Major investors like Goldman Sachs, Alphabet and the Pritzker Group, who had invested huge amounts in the company and were defrauded.
In April 2023, a federal jury convicted Rishi Shah, Agarwal and Purdy on multiple counts of fraud and money laundering.
Rishi Shah was found guilty of five counts of mail fraud, ten counts of wire fraud, two counts of bank fraud and two counts of money laundering.
Agarwal was convicted of five counts of mail fraud, eight counts of wire fraud and two counts of bank fraud.
Three other former employees of Outcome Health pleaded guilty prior to the trial. The U.S. Securities and Exchange Commission (SEC) also brought charges against Shah, Agarwal, Purdy and another executive, Ashik Desai, for using false financial statements to raise funds.
Between 2011 and 2017, Outcome Health overbilled clients for $45 million in undelivered advertising services.
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