Rishi Shah, the son of a doctor who came from India, has been convicted of "deceiving" their clients, auditor, lenders, and investors for years.
Rishi Shah, a thirty-eight-year-old Indian-American, was sentenced to seven years and six months in jail on Wednesday for his role in a billion-dollar fraud scheme using graphic advertisements at doctors' offices, according to the Wall Street Journal.
“Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years,” Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the United States Justice Department’s Criminal Division stated.
“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,” Argentieri said.
Who is Rishi Shah?
Rishi Shah is the founder of Outcome Health, a Chicago-based health technology start-up that provides advertorials on televisions in doctors' offices around the United States and also sells space for commercials on their devices to clients, primarily pharmaceutical corporations.
According to a Forbes story from 2017, Shah grew raised in Oak Brook, a Chicago suburb. He is the son of a doctor who emigrated from India, according to the story.
According to his LinkedIn page, Shah also serves as the chairman and managing director of JumpStart Ventures. He attended Harvard and Northwestern universities. According to Forbes, he met Shradha Agarwal, president and co-founder of Outcome Health, while attending Northwestern University. They founded a company called 'ContextMedia' in 2006, which was then renamed Outcome Health in 2016 after purportedly purchasing AccentHealth.
What was the case against Rishi Shah?
According to Bloomberg, prosecutors were seeking a 15-year term for Shah, claiming he was the "driving force behind a dizzying array of lies to clients, lenders, investors, and an audit firm."
The US Department of Justice described the scam as Shah selling "advertising inventory the company did not have to Outcome's clients and then underdelivering on its advertising campaigns." Despite these under-delivery, the corporation continued to invoice its clients as if it had supplied in full.
In addition to Shah, Agarwal and former COO and CFO Brad Purdy have been imprisoned for their roles in the fraud conspiracy.
According to the Justice Department, the three former executives of the company "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."
"According to the trial evidence, the scheme targeting Outcome's clients began in 2011 and lasted until 2017, and resulted in at least $45 million of overbilled advertising services," a release from the Department stated.
According to Bloomberg, the fraud plan involved investors including Goldman Sachs Group Inc., Google parent Alphabet Inc., and Illinois Governor JB Pritzker's venture capital business.
The matter was investigated by the Federal Bureau of Investigation (FBI) and the Federal Deposit Insurance Corporation-Office of Inspector General. The United States Securities and Exchange Commission assisted with the case.