- Friday, April 19, 2024
By: Shubham Ghosh
Two Indian-origin executives of a start-up in Chicago, US, have been convicted by a federal jury in that country of running a $1 billion (£806 million) corporate fraud scheme that targeted the company’s clients, lenders and investors.
Following a 10-week-long trial, jurors on Tuesday (11) found health technology company Outcome Health co-founder and former chief executive officer Rishi Shah guilty on 19 of 22 counts, co-founder and former president Shradha Agarwal guilty on 15 of 17 counts and former chief operating officer Brad Purdy guilty on 13 of 15 counts.
Shah, 37, was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud and two counts of money laundering.
Agarwal, 37, was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud, while Purdy, 33, was convicted of five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution.
The defendants face a maximum penalty of 30 years in prison for each count of bank fraud and 20-year imprisonment for each count of wire fraud and mail fraud.
Shah faces a maximum penalty of 10 years in prison for each count of money laundering.
A sentencing hearing will be scheduled at a later date.
A statement issued by the justice department said on Tuesday that the company installed television screens and tablets in doctors’ offices around the US and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies.
According to evidence presented at the trial, Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns.
Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full.
Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts.
Purdy and others at the company also inflated metrics that purported to show how frequently patients engaged with the company’s tablets installed in doctors’ offices.
According to the trial evidence, the scheme targeting the company’s clients began in 2011, lasted until 2017, and resulted in at least $45 million of overbilled advertising services.
Shah, Agarwal, and Purdy were also convicted of defrauding the company’s lenders and investors. The under-delivery to the company’s advertising clients resulted in a material overstatement of the company’s revenue for the years 2015 and 2016.
A spokesperson for Shah said in a statement, “Today’s verdict deeply saddens Mr. Shah, and he will exhaust every avenue to overturn this result”.
Theodore Poulos, an attorney for Purdy said in a statement, “We are profoundly disappointed with the jury’s verdict in this complex and nuanced case, particularly given the plethora of evidence adduced at trial, which showed that certain critical information was intentionally withheld from Brad Purdy.”
Lawyers for Agarwal declined to comment on Tuesday, the report said. Three other former employees of Outcome pleaded guilty prior to trial. Ashik Desai, the former chief growth officer pleaded guilty to one count of wire fraud.
Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai, Choi, and Han will be sentenced at a later date.
(PTI)
