TWO Indian-origin executives of a health technology start-up in Chicago called Outcome Health have been found guilty by a US federal jury of running a $1 billion corporate fraud scheme.
Rishi Shah, the co-founder and former CEO, was convicted of 19 out of 22 counts, while co-founder and former president Shradha Agarwal and former chief operating officer Brad Purdy were convicted on 15 out of 17 counts and 13 out of 15 counts respectively.
The trio faces a maximum of 20-30 years in prison for each count of wire fraud, mail fraud, and bank fraud.
The Justice Department found that the company sold advertising space on television screens and tablets in doctors’ offices across the US, which they did not have, and then under-delivered on advertising campaigns while still invoicing their clients as if they had delivered in full.
Outcome Health had set up electronic devices in medical offices across the US and sold advertising space on those devices to clients, most pharmaceutical companies. However, Shah, Agarwal, and Purdy sold advertising inventory that the company did not have and did not deliver the promised advertising campaigns. Despite this, they still invoiced clients as if they had delivered in full, the court found.
The scheme resulted in at least $45 million in overbilled advertising services from 2011 to 2017, and the executives were also convicted of defrauding the company’s lenders and investors.
The verdict could have implications for others in the tech community, as parts of the case focused on the line between typical growing pains of startups and fraud.
