Three former Outcome Health executives have been convicted of running a multi-billion dollar scam.

A federal jury Yesterday (Apr 11) Conviction Outcome Health’s two co-founders—former CEO Rishi Shah, former president Shraddha Agarwal—and former chief operating officer and chief financial officer Brad Purdy, “for their roles in a fraud scheme that targeted and involved the company’s clients, lenders and investors.” $1 billion in fraudulently obtained funds.”

The once-high-flying health-tech company’s business mandate was simple: It billed pharmaceutical companies like (and including) Novo Nordisk to run their ads on video screens in doctors’ offices and waiting rooms. But things got complicated as results began to elude the numbers.

The company sold advertising inventory that the company’s Outcomes clients did not have, underdelivered on its ad campaigns and then billed the clients as if the work had been completed, according to the Justice Department. For several years, between 2011 and 2017, executives and employees concealed under-deliveries through a series of deceptions, including inflated engagement metrics and manipulated third-party reports to maintain the pretense. Company executives lied not only to customers, but also to auditors and investors.

A sentencing hearing has yet to be scheduled.

Table: Results of former health executives’ beliefs at a glance

Results in health fraud and fines, by numbers

$45 million: Overbilled advertising services between 2011 and 2017

$110 million: Debt financing raised in April 2016 using inflated revenue figures. This resulted in $30.2 million in dividends to Shah and $7.5 million to Agarwal.

$375 million: Debt financing raised in December 2016

At least 23%: How financial statements deliver results to investors overstated Its income in 2015 and 2016

12: About half of the 28 were return-on-investment studies manipulated Giving the illusion that ad campaigns have met performance guarantee thresholds

$487.5 million: Equity financing Raised Early 2017—$100 million from a Goldman Sachs-managed fund and $50 million now from Illinois Gov. JB Pritzker’s venture capital fund, a fund linked to Google parent Alphabet, and one linked to Laurin Powell Jobs’ Emerson Collective. This values ​​the company at $5.5 billion. A dividend of $225 million has been earmarked for Shah and Agarwal

30 years: All three defendants face maximum prison terms for each count of bank fraud

20 years: Each count of wire fraud and mail fraud carries a maximum prison term of three

30 years: Purdy’s maximum penalty for the count of making false statements to a financial institution

10 years: Shah faces the maximum sentence for each count of money laundering

Who are the Outcome Health executives behind the scandal?

The jury convicted the company’s three head honchos:

👨🏾 Rishi Shah, 37, co-founder and former CEO of Outcome.

👩🏾 Shraddha Agarwal, also 37, was Outcome’s co-founder and former president.

👨🏼 Brad Purdy, 33, formerly served as Chief Operating Officer and Chief Financial Officer.

But they are not the only ones under the legal spotlight. A handful of former results workers have already pleaded guilty to their involvement in the fraud:

👨🏾 Ashiq Desai, former chief growth officer at Outcome, pleaded guilty to one count of wire fraud. He made a deal with the government to reduce his sentence in exchange for testifying against his former bosses. He was the one star witness who testified in February.

👩🏻 Catherine Choi, a former senior analyst, pleaded guilty to conspiracy to commit wire fraud.

👨🏻 Oliver Hahn, a former analyst, pleaded guilty to conspiracy to commit wire fraud.

The result is a brief timeline of health revelations

2006: Shah and Aggarwal, students at Northwestern University, found the results health.

Second half of 2012 to 2013: Shah and Aggarwal were directly involved in providing fake list match results to clients, including offices and devices within the list match that were not in the results network.

Second half 2013 to 2017: Shah and Purdy trained Desai to perform list matches, after which he oversaw the list match process for years.

October 2017: A Wall Street Journal report Some results reveal that workers have misled customers by charging them for ad placement on more video screens than installing startups and presenting false, inflated statistics about the business.

November 2017: The resulting investors, including Goldman Sachs Group, Chicago-based Pritzker Group Venture Capital, Google’s parent Alphabet and others, File a lawsuit against the company, alleging that they were defrauded during an equity funding round earlier that year. Shah and Aggarwal initially denied wrongdoing, but three months later, they resigned and settled, agreeing to return $159 million in dividends earned from a nearly $500 million equity round. At least one big name pharma advertiser, Bristol-Myers Squibb, Not renewed Its advertising deals with results for 2018.

October 2019: The result is former execs and employees confessing to defrauding clients and agree to pay $70 million as part of a 2019 settlement to resolve federal fraud allegations.

November 2019: The Justice Department charged the trio of executives and the Securities and Exchange Commission File a case against them. All three denied the allegations at the time. The SEC decision is still pending as of April 2023.

December 2019: Choi and Han pleaded not guilty to the charges against them.

January 2020: Choi and Han Change plea to criminal and cooperate with investigators.

March 2021: result Integrates with rival PatientPoints.

Quote: The fake-it-til-up-make-it attitude of results

“It was a company built on a lie.” Prosecutor William Johnston During the government’s closing arguments, quoted in the Wall Street Journal.

related stories

💭 How Safeway and Walgreens fell for Theranos’ pipe dream

💰 A tech founder who didn’t pay workers for months but bought a $16 million private jet has been arrested

👮‍♀️ OG Media founder Carlos Watson was arrested after two former executives admitted to fraud

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *