The Department of Justice (DOJ) has announced the sentences handed down to three former executives of Chicago-based health technology startup Outcome Health, who were convicted on fraud charges in April 2023.
Rishi Shah, a co-founder and former CEO of Outcome, was sentenced to seven years and six months in prison; Shradha Agarwal, a co-founder and former president of the company, was sentenced to three years in a half-way house; and Brad Purdy, a former chief operating officer and chief financial officer of the company, was sentenced to two years and three months in prison, the DOJ said in a Monday (July 1) press release.
The three former executives were convicted for their roles in a years-long, $1 billion scheme that targeted Outcome Health’s clients, lenders and investors, according to the release.
Outcome Health, which was founded as Context Media in 2006 before changing its name in 2017, installed television screens and tablets in doctor’s offices in the United States and then sold advertising space on those devices, the release said.
According to court documents and evidence presented at trial, Shah, Agarwal and Purdy defrauded the company’s clients by concealing that the company under-delivered on its advertising campaigns, while invoicing them as if it had delivered what it had promised, per the release.
In addition, the three defendants defrauded Outcome Health’s lenders and investors by materially overstating the company’s revenue and using the inflated figures to raise debt financing and equity financing, according to the release.
“Their sentences should serve as yet another reminder that ‘faking it until you make it’ is not an acceptable practice for any business, whether that company is a technology startup or a well-established corporation,” Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, said in the release. “Lying about your revenue to obtain customers or financing is fraud, plain and simple.”
It was reported in March that the DOJ is targeting “fake it till you make it” tech startups.
In some other moves announced in May, the DOJ charged two Chinese nationals with leading a scheme to launder proceeds from cryptocurrency investment scams, and charged two brothers with crime relating to a theft of cryptocurrency.
For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More