U.S. charges former Outcome Health executives in $1 billion fraudChristian Fernsby ▼ | November 26, 2019
U.S. prosecutors announced criminal charges accusing the founders of Outcome Health of overseeing a scheme to overbill clients and fraudulently obtain nearly $1 billion of funds, including from major investors.
American health Chief Executive Rishi Shah
Topics: U.S. Outcome Health fraud
The U.S. Department of Justice announced the charges four weeks after Outcome agreed to pay $70 million and enter a non-prosecution agreement to end a related criminal probe.
Outcome streams pharmaceutical ads on televisions and computer tablets it installs in doctors’ offices.
Prosecutors said the defendants maintained a facade of “extraordinary revenue growth” through a scheme from 2011 to 2017 in which Outcome overstated its industry connections, billed clients for ads that never ran and inflated revenue.
They said this enabled Chicago-based Outcome to raise $487.5 million of equity financing and borrow $485 million, with investors that included affiliates of Goldman Sachs Group Inc, Google parent Alphabet Inc and Pritzker Group.
Outcome said in 2017 it was worth $5 billion, and Forbes magazine estimated Shah’s net worth at $3.6 billion.
Prosecutors charged Shah, 33, Agarwal, 34, and former Chief Financial Officer Brad Purdy, 30, with various counts of bank fraud, mail fraud and wire fraud. Ashik Desai, 26, a former executive vice president, was charged with one wire fraud count.
The U.S. Securities and Exchange Commission filed related civil charges against the four defendants. Two former Outcome analysts face separate criminal charges. ■