The fraud convictions of two former top executives of Outcome Health, a Chicago-based tech company, have been upheld by the appellate court. On Thursday, a three-judge panel from the 7th U.S. Circuit Court of Appeals affirmed a jury’s decision from over three years ago. This decision found the executives guilty on multiple fraud counts.
In a 2023 trial lasting ten weeks, co-founder and former CEO Rishi Shah and co-founder and former President Shradha Agarwal were found guilty of 19 and 15 counts of fraud respectively. As a result, in 2024, Shah received a 7½-year prison sentence while Agarwal was sentenced to three years of confinement at a halfway house. Despite their convictions, both executives remained free during the appeal.
Outcome Health had been a rising star in Chicago’s tech scene, primarily by selling advertising to pharmaceutical companies. This advertising was displayed on TVs and tablets installed in doctors’ offices and waiting rooms. The company expanded rapidly from 16 employees in 2011 to more than 500 employees by 2017, achieving a reported valuation exceeding $5 billion. The company attracted nearly $1 billion in funding from lenders and high-profile investors, including entities connected to Gov. JB Pritzker, Goldman Sachs, and Google.
However, the company’s success halted when a former analyst alleged to the Wall Street Journal that Outcome was deceiving pharmaceutical companies and inflating data figures. During the 2023 trial, prosecutors claimed Shah, Agarwal, and a third executive, Brad Purdy, falsely represented how many doctors’ offices were using screens and tablets with their content. These inflated figures were used to overcharge drug companies and misrepresent revenue figures to obtain loans and investments. Although Purdy was convicted in the scheme, the appeal did not include him.
The defense argued that Shah and Agarwal were unable to hire their preferred lawyers for the trial, as the government improperly froze too many assets before the trial began. Although the government conceded that some frozen assets were unrelated to the fraud, the appellate court supported the lower court’s decision. It stated the executives had been provided sufficient information about the asset issue to address it before the original trial.
Shah’s attorney, Richard Finneran, criticized the court’s ruling for not penalizing the government’s restraint of funds required for Shah’s defense. Finneran announced intentions to seek further review, potentially from the Supreme Court, to protect Shah’s constitutional rights.
The appellate court emphasized that evidence indicated Shah and Agarwal knowingly failed to fulfill promises, inducing contracts based on inaccurate inventory figures and pursuing financing using misleading financial information. The opinion noted years of under-delivery clearly demonstrated intent to defraud.
Attempts to reach Agarwal’s attorney were unsuccessful Friday afternoon.