Rishi Shah, an Indian-American businessman and the co-founder of Outcome Health has been sentenced to seven and a half years in prison in a $1 billion fraud scheme. The fraudulent scheme deceived several high-profile clients, like Goldman Sachs Group Inc, and Google’s parent Alphabet Inc and Illinois Governor JB Pritzker’s venture capital firm.

Shah was charged over 12 counts of fraud and money laundering.

Shah found Outcome Health, previously named Context Media Health, in 2006 after dropping out of university. The advertising startup aimed to promote medical advertising by installing televisions in offices of doctors that displayed targeted health ads to patients.

Indian-American businessman
Image Source: Cash Flow Inventory

By the middle of the last decade, Outcome Health was a pretty big name in the healthcare investment sectors. Their promise of combining cutting-edge technology in medical sectors and improving existing conditions by entrepreneurship seemed extremely compelling, moreso by the fact that it seemed to work. Investors were attracted. They’d had an incredible rise through the ranks, reflected in the lavish lifestyle of the company’s owners. Shah’s lifestyle comprised of private jets, yachts, and luxurious $10 million villa home.

But the truth of it, under all the layers of glamour and fame, was that they had been inflating their figures. Boosting advertising inventory, fabricating data and making it seem, to approaching clientele, that they were much bigger than what they actually were. It was through extensive media investigations and lawsuits filed against them by major investors that their scheme was revealed. It was a Wall Street Journal media expose that brought them down in 2017.

Outcome Health had defrauded Novo Nordik A/S, a pharmaceutical giant, and many others about how incredibly large its network was and how effective its advertising programmes were. All the misinforming, misleading information and falsified data only made them a more compelling investment opportunity for investors who were looking to invest, without any real guarantee of reaping the same kind of profits they’d invested for.

In April 2023, Shah along with Outcome Health’s co-founders Shradha Agarwal and Brad Purdy were convicted. Judge Durkin presided over the case, and despite the aggressive and significant fifteen year long prison term sought by the prosecutors for Shah and ten years for his accomplices, Judge Durkin handed sentences he saw fit in terms of involvement and degree of remorse.

Shah was handed seven and a half years, keeping his health and his apparent regret in mind. During the proceedings, Shah had extremely willing to accept responsibility and redirect all shortcomings to his own flaws that may have led to the eventual state of the company—that is, willing to admit that it was his careless approach to advertising themselves that let the people on his team think it was okay to do the same.

“The culture I created permissioned people on my team to think it was okay to create false data in response to client questions,” he said in a statement.   

Agarwal was handed a three year sentence to be spent in a halfway house and Purdy was handed two years and three months in prison.

Alongside the criminal suit, the Securities and Exchange Commission has also filed a civil suit against Shah, Agarwal and Purdy—alongside former chief growth officer Ashik Desai.

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