US: A federal jury in the US found two Indian-origin executives of a Chicago-based start-up guilty of orchestrating a USD 1 billion corporate fraud conspiracy that was directed at the company’s customers, lenders, and investors.
Executives found guilty
After a 10-week trial, the jury found the co-founder and former CEO of the health technology company Outcome Health, Rishi Shah, guilty on 19 of 22 counts, the co-founder and former president, Shradha Agarwal, guilty on 15 of 17 counts, and the former COO, Brad Purdy, guilty on 13 of 15 counts. Shah, 37, was found guilty of two counts of bank fraud, two counts of money laundering, two counts of wire fraud, five counts of mail fraud, and ten counts of wire fraud. Purdy, 33, was found guilty of five charges of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of making false representations to a financial institution. Agarwal, 37, was found guilty of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. The maximum sentence for each case of bank fraud against the defendants is 30 years in prison, and each count of wire fraud and mail fraud carries a maximum sentence of 20 years in jail.
A later date will be set for the sentencing hearing
The maximum sentence for Shah for each count of money laundering is ten years in prison. A later date will be set for the sentencing hearing. The corporation installed televisions and tablets in doctors’ offices across the US, according to a statement with the Justice Department, and then sold advertising space on those devices to clients, the majority of whom were pharmaceutical companies. Shah, Agarwal, and Purdy under-delivered on their advertising campaigns after selling Outcome’s clients advertising inventory the company did not have, according to the trial’s evidence.
Shah, Agarwal, and Purdy raised USD 110 million in debt financing in April 2016
The business continued to bill its customers as though it had delivered in full notwithstanding these under-delivery instances. To hide the under-delivery from clients and provide the impression that the company was delivering advertising content to the number of screens specified in the clients’ contracts, Shah, Agarwal, and Purdy either lied themselves or ordered others to lie. The company’s revenue for the years 2015 and 2016 were materially overstated as a result of the under-delivery to the company’s advertising clients. Shah, Agarwal, and Purdy raised USD 110 million in debt financing in April 2016, USD 375 million in loan financing in December 2016, and USD 487.5 million in equity financing in early 2017 by inflating the company’s revenue statistics in its audited financial accounts for the years 2015 and 2016.
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Three additional former Outcome workers entered guilty pleas
Prior to trial, three additional former Outcome workers entered guilty pleas. The former chief growth officer, Ashik Desai, admitted guilt to one count of wire fraud. Oliver Han, a former analyst, and Kathryn Choi, a former senior analyst, both admitted to conspiring to conduct wire fraud. Desai, Choi, and Han’s sentences will be handed out later.
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