DOJ Issues Sentences for Ex-Outcome Health Executives in $1 Billion Fraud Scandal
The U.S. Department of Justice (DOJ) has announced the sentencing of three former executives from Outcome Health, a Chicago-based health technology startup, for their roles in a major fraud scheme. The convictions, which came in April 2023, mark a significant moment in the DOJ’s crackdown on corporate fraud.
In a press release issued on Monday, July 1, the DOJ revealed the sentences for the convicted executives: Rishi Shah, co-founder and former CEO of Outcome Health, has been sentenced to seven years and six months in federal prison. Shradha Agarwal, co-founder and former president, will serve three years in a halfway house. Brad Purdy, former chief operating officer and chief financial officer, received a sentence of two years and three months in prison.
Details of the Fraud Scheme
The three executives were found guilty of orchestrating a multi-year, $1 billion fraud scheme that defrauded Outcome Health’s clients, lenders, and investors. Founded in 2006 as Context Media and rebranded as Outcome Health in 2017, the company specialized in installing digital screens and tablets in medical offices across the United States for advertising purposes.
Court documents and trial evidence demonstrated that Shah, Agarwal, and Purdy engaged in fraudulent activities by misrepresenting the success of their advertising campaigns. They falsely claimed to have met advertising commitments while billing clients as if the campaigns had been completed as promised. Additionally, they inflated the company’s revenue figures to secure debt and equity financing, misleading lenders and investors.
Statements from the DOJ
In the press release, Principal Deputy Assistant Attorney General Nicole M. Argentieri, who leads the DOJ’s Criminal Division, highlighted the broader implications of the case: “These sentences underscore that ‘faking it until you make it’ is not an acceptable business practice, whether for a startup or a major corporation. Misrepresenting your financial status to secure customers or financing is straightforward fraud.”
The DOJ’s recent enforcement actions reflect a broader initiative targeting fraudulent practices in the tech industry. In March, the department had announced its focus on “fake it till you make it” schemes in the tech sector.
Other DOJ Actions
In related legal developments announced in May, the DOJ charged two Chinese nationals with orchestrating a scheme to launder proceeds from cryptocurrency investment scams. Additionally, two brothers faced charges in connection with a cryptocurrency theft.
Ongoing DOJ Initiatives
The Outcome Health case represents a key part of the DOJ’s efforts to hold companies accountable for fraudulent practices and uphold integrity in the business world. The department continues to investigate and address fraudulent activities across various sectors.
About Outcome Health
Outcome Health, originally known as Context Media, was established in 2006 and rebranded in 2017. The company was known for providing digital advertising solutions in medical offices across the United States.
