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Two former executives of Outcome Health (Outcome), a Chicago-based health technology start-up company, were sentenced for their involvement in a fraud scheme that targeted the company's clients, lenders, and investors.

Rishi Shah, 38, a co-founder and former CEO of Outcome and Shradha Agarwal, 38, a co-founder and former president of Outcome were found guilty in the scheme that involved approximately $1 billion in fraudulently obtained funds. Shah was sentenced to seven years and six months in prison, while Agarwal was sentenced to three years in a half-way house.

According to court documents, Shah, Agarwal, and Brad Purdy, 35, the former chief operating officer and chief financial officer of Outcome, sold advertising inventory the company did not have to Outcome’s clients and then under-delivered on its advertising campaigns. They also made it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts.

The scheme targeting Outcome’s clients began in 2011 and lasted until 2017, resulting in at least $45 million in overbilled advertising services. Additionally, Shah, Agarwal, and Purdy also defrauded Outcome’s lenders and investors by inflating revenue figures to raise $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017.

A federal jury convicted Shah, Agarwal, and Purdy in April 2023. Shah was convicted of five counts of mail fraud, 10 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.

“The defendants in this case have been brought to justice for their actions in deceiving Outcome Health’s clients and fraudulently obtaining approximately $1 billion from its lenders and investors,” said Assistant Inspector General for Investigations Shimon R. Richmond of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). 

“The defendants’ vast scheme defrauded the clients, investors, and lenders who supported their business,” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois. “Although they sought to hide the fraud by silencing whistleblowers and duping auditors, a jury rightly held the defendants accountable for their extensive fraud scheme."