iNDICA NEWS BUREAU-
Chicago, June 30, 2024 – Rishi Shah, once a rising star in Chicago’s tech scene, has been sentenced to 7.5 years in federal prison for his role in a widespread fraud scheme. The sentence was handed down on Wednesday, June 26, by U.S. District Judge Thomas Durkin, following a two-day hearing.
Shah, whose company revolutionized pharmaceutical advertising in doctor’s offices with strategically placed screens and tablets, now faces the harsh reality of a massive fraud scheme that brought his meteoric rise to a crashing halt.
Shah, the co-founder of the now-disgraced pharmaceutical advertising firm Outcome Health, was convicted last year along with former executives Shradha Agarwal and Brad Purdy on multiple fraud charges. Shah and Agarwal founded Outcome Health in 2006 as ContextMedia LLC.
The company experienced phenomenal growth. By 2017, the company boasted a valuation exceeding $5 billion, and Shah himself was estimated to be worth a staggering $3.6 billion. Investors, including financial giants like Goldman Sachs and the Pritzker Group, were eager to get a piece of the seemingly unstoppable company.
The bubble burst in October 2017 when the Wall Street Journal exposed potential fraud at the company. Federal prosecutors soon took notice, leading to indictments in 2019. The government alleged that between 2011 and 2017, Shah and his co-defendants orchestrated a scheme that defrauded investors, lenders, and clients of nearly $1 billion.
Judge Durkin’s sentence, which includes three years of supervised release post-incarceration, fell short of the 15-year term prosecutors had sought. The judge cited Shah’s clean prior record and family circumstances as mitigating factors. However, Durkin didn’t mince words in his rebuke, accusing Shah of being “driven by greed” and desiring to be a “big shot.”
During the trial, prosecutors painted a picture of systematic deception. They argued that Outcome Health consistently under-delivered on its advertising commitments while charging full price, then falsified records to conceal the discrepancies from auditors and clients.
Shah, Agarwal, and Purdy vehemently denied any wrongdoing, attempting to shift the blame to a former VP of Sales, Ashik Desai. Desai had already pleaded guilty to falsifying financial reports. Despite their defense, a jury found Shah guilty on 19 fraud counts, Agarwal on 15, and Purdy on 13 in April 2023.
In determining the sentence, Judge Durkin distinguished between the often-cited “$1 billion fraud” figure and the actual losses incurred. He ruled that while $1 billion was raised through fraud, the provable losses to pharmaceutical clients amounted to $23.3 million.
At his sentencing, Shah expressed remorse and a desire for redemption, though he stopped short of admitting guilt. His attorney has announced plans to appeal both the verdict and the sentence.
