Rishi Shah, a 38-year-old Indian-American, was sentenced to seven and a half years in prison for his role in a billion-dollar fraud scheme involving visual advertisements in doctors’ offices.
Nicole M. Argentieri, head of the United States Justice Department’s Criminal Division, said, “Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years.” She added, “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 start-up or a well-established corporation.
Lying about your revenue to obtain customers or financing is fraud, plain and simple. The Criminal Division is committing to holding companies and their executives accountable for their misconduct.”
Prosecutors wanted a 15-year sentence for Shah, calling him the “driving force behind a dizzying array of lies to clients, lenders, investors and an audit firm.” The US Department of Justice stated that Shah sold “advertising inventory the company did not have to Outcome’s clients and then under-delivered on its advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full.”
Besides Shah, Shradha Agarwal and former chief operating officer and chief financial officer Brad Purdy were also sentenced for their roles in the fraud. The Justice Department stated that all three “lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts.” The fraud scheme began in 2011 and lasted until 2017, resulting in at least $45 million in overbilled advertising services.
The fraud involved investors such as Goldman Sachs Group Inc., Google parent Alphabet Inc., and Illinois Governor JB Pritzker’s venture capital firm. The Federal Bureau of Investigation (FBI) and the Federal Deposit Insurance Corporation-Office of Inspector General (FDIC-OIG) investigated the case. The United States Securities and Exchange Commission also provided assistance.
Rishi Shah is the founder of Outcome Health, a Chicago-based health technology start-up. This company provided advertorials on televisions in doctors’ offices across the U.S. and sold advertising space on their devices, mainly to pharmaceutical companies.
According to a 2017 Forbes article, Shah grew up in Oak Brook, a Chicago suburb. He is the son of a doctor who emigrated from India. His LinkedIn profile shows he is also the chairman and Managing Director of JumpStart Ventures. Shah studied at Harvard and Northwestern universities. At Northwestern, he met Shradha Agarwal, the president and co-founder of Outcome Health. They started a company called ‘ContextMedia’ in 2006, which became Outcome Health in 2016 after purchasing AccentHealth.
