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Indian American Entrepreneur Rishi Shah Sentenced to 71/2 Years in Prison for Fraud 

Indian American Entrepreneur Rishi Shah Sentenced to 71/2 Years in Prison for Fraud 

  • The 38-year-old former CEO and co-founder of the Chicago-based Outcome Health was found guilty last year of his role in a $1 billion scheme that targeted the company's clients, lenders, and investors.

Indian American entrepreneur Rishi Shah, former CEO and co-founder of the Chicago-based pharmaceutical advertising company Outcome Health, has been sentenced to seven-and-a half years in prison. The June 26 sentence comes a little over a year after a jury found the 38-year-old guilty of his role in a $1 billion scheme that targeted the company’s clients, lenders, and investors. 

Shah was arrested in April 2023 along with  two other company executives —  co-founder and former President Shradha Agarwal and former Chief Operating Officer and Chief Financial Officer Brad Purdy. 

The Chicago Tribune noted that Shah has already retained former acting U.S. Solicitor General Neal Katyal to appeal his conviction. He also “plans to appeal his sentence,” the the publication added.

During the sentencing trial, the government prosecutors had asked U.S. District Judge Thomas Durkin to give Shah 15 years in prison, calling him “the architect” of a $1 billion fraud, the Chicago Tribune said. The U.S. Probation Office, meanwhile, had recommended 8 years, the Tribune said, citing a memo filed by Shah’s attorneys. 

But, Durkin said “Shah’s lack of a criminal history, love of his young son and other factors all counted in his favor,” the report said. But before the sentencing, he told Shah the fraud was “not a single mistake or out-of-character impulsive moment.,” The Wall Street Journal reported. “A lot of this I believe was driven by greed … dreams of being a big shot,” he added.

Durkin further ordered Shah to serve three years of supervised release after getting out of prison. 

Shah also spoke to the judge before the sentencing, the Tribune said. He told the judge he’s “deeply sorry” for those who trusted him with their money and careers.“In my head and heart I feel tremendous responsibility for what happened at Outcome Health.

During the trial, “defense attorneys blamed the problems “at the company on a fourth former Outcome employee, Ashik Desai, the Tribune report said. He pleaded guilty to one count of wire fraud before the trial. He testified that he falsified screen shots and return-on-investment reports without his bosses’ knowledge. 

Ultimately, the jury didn’t buy that Desai was solely responsible for the fraud at Outcome. As part of an agreement with the government, Desai could get a reduced prison sentence for testifying at the trial last year. He is scheduled to be sentenced in September.

Agarwal and Purdy are also scheduled to be sentenced this week.

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Outcome, which was conceived while Shah was a student at Northwestern University. It rose to success selling advertising to pharmaceutical companies, and running those ads on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms. 

During the trial last year, government prosecutors alleged that Shah, Agarwal and Purdy lied about how many doctors’ offices had screens and tablets running their content. Prosecutors said they then used those false numbers to overcharge drug companies for advertising, and inflated revenue figures used to get loans and raise money from investors.  The fraud scheme that began in 2011, lasted until 2017, “and resulted in at least $45 million of over billed advertising services,” according to the Department of Justice. 

Over the years, the company was able to raise nearly $1 billion from lenders and high-profile investors, including a fund co-founded by Gov. J.B. Pritzker and units of Goldman Sachs and Google. At one point, in 2017, Outcome employed more than 500 workers and had a reported valuation of more than $5 billion.

The fraud came to light when a former Outcome analyst contacted The Wall Street Journal, which ran an article in 2017 detailing the alleged problems at Outcome.

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