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Indian-American entrepreneur Rishi Shah gets over 7 years in prison
Jurors found him guilty on 19 counts for orchestrating a nearly $1 billion fraud against investors, lenders, and clients.
Chicago-based Rishi Shah is the co-founder of pharmaceutical advertising company Outcome Health. / LinkedIn/Rishi Shah
Rishi Shah, co-founder of pharmaceutical advertising company Outcome Health, received a 7.5-year sentence in federal court on June.26. Shah was convicted on multiple fraud counts last year along with fellow former executives Shradha Agarwal and Brad Purdy.
According to Courthouse News Service, US District Judge Thomas Durkin noted Shah’s clean criminal history and his love for his young son as mitigating factors but condemned Shah’s greed and desire for status. "He was driven by greed" and "want[ed] to be a big shot," Durkin said. Federal prosecutor Kyle Hankey also described Shah as the "most culpable defendant" and the primary organizer of the fraud.
Outcome Health, founded as ContextMedia LLC by Shah and Agarwal in 2006, advertised medications on screens in doctors' offices. The company flourished, and by 2017, it was valued at over $5 billion. That same year, major investors including Goldman Sachs and Google affiliate CapitalG invested $500 million in the company.
However, a Wall Street Journal article in October 2017 exposed potential fraud, triggering a federal investigation. In 2019, Shah, Agarwal, and Purdy were indicted for orchestrating a nearly $1 billion fraud against investors, lenders, and clients. Prosecutors alleged that Outcome Health underdelivered on advertising but still charged clients fully, falsifying records to conceal the discrepancy.
Despite Shah's defense blaming the fraud on former VP of sales Ashik Desai, who pleaded guilty in 2019, jurors found Shah guilty on 19 counts, Agarwal on 15, and Purdy on 13 in April 2023, as per Courthouse News Service.
Judge Durkin, while recognizing the $1 billion figure referred to raised funds and not actual losses, estimated Outcome's pharma clients suffered $23.3 million in losses. "Loss is when you lose money. These pharmaceutical companies lost money year after year," Durkin said.
Shah’s defense sought home confinement instead of prison, arguing he could still contribute positively. "The world is better with Rishi," said his friend Kevin Smith. Shah expressed remorse and a desire for redemption but did not admit guilt. "I feel deeply responsible for what happened at Outcome Health," Shah stated.
Shah’s attorney Richard Finneran plans to appeal both the 2023 verdict and the June.26 sentence.
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