Rishi Shah is the founder of Outcome Health, a health technology startup based in Chicago that provided advertisements on televisions in doctors’ offices across the US.
Rishi Shah, a 38-year-old Indian-American entrepreneur, received a seven-and-a-half-year prison sentence last Wednesday for his involvement in a billion-dollar fraud scheme centered around visual advertisements in doctors’ offices, as reported by the Wall Street Journal.
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Nicole M. Argentieri, Principal Deputy Assistant Attorney General and head of the U.S. Justice Department’s Criminal Division, emphasized the gravity of the case. “The former executives of Outcome Health misled their clients, auditors, lenders, and investors for years,” she stated. “Their sentences reinforce that ‘faking it until you make it’ is unacceptable in any business context, whether a startup or an established corporation. Misrepresenting revenue to secure customers or financing is straightforward fraud. The Criminal Division is dedicated to holding companies and their executives accountable for such misconduct.”
Who is Rishi Shah?
Rishi Shah is the founder of Outcome Health, a health technology startup based in Chicago that provided advertisements on televisions in doctors’ offices across the U.S. and sold advertising space on their devices, primarily to pharmaceutical companies.
A 2017 Forbes article details that Shah grew up in Oak Brook, a Chicago suburb, as the son of a doctor who emigrated from India. According to his LinkedIn profile, Shah also serves as the chairman and Managing Director of JumpStart Ventures. He attended Harvard and Northwestern universities, meeting Shradha Agarwal at Northwestern.
Agarwal, who is the president and co-founder of Outcome Health, partnered with Shah in 2006 to start a company called ContextMedia, which rebranded to Outcome Health in 2016 after acquiring AccentHealth.
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The Case Against Rishi Shah
Bloomberg reported that prosecutors sought a 15-year sentence for Shah, whom they described as the “driving force behind a series of lies to clients, lenders, investors, and auditors.” The U.S. Department of Justice explained that Shah sold “advertising inventory that the company did not possess to Outcome’s clients and then under-delivered on these campaigns. Despite these under-deliveries, the company invoiced clients as if they had delivered in full.”
Alongside Rishi Shah, Shradha Agarwal and former COO/CFO Brad Purdy were also sentenced for their involvement in the fraud. According to the Justice Department, all three executives “lied or caused others to lie to conceal the under-deliveries from clients, creating the illusion that the company was fulfilling its advertising contracts.”
The fraudulent activities began in 2011 and continued until 2017, resulting in at least $45 million of overbilled advertising services, the Justice Department disclosed. The scheme involved high-profile investors, including Goldman Sachs Group Inc., Google’s parent company Alphabet Inc., and Illinois Governor JB Pritzker’s venture capital firm.
The case was thoroughly investigated by the FBI and the FDIC Office of Inspector General, with assistance from the U.S. Securities and Exchange Commission.
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