This Post Originally Ran on the Chicago Business Journal
Illinois suspended a tax credit agreement with Outcome Health on Tuesday following allegations that the company defrauded investors and advertisers.
The deal was part of the EDGE program, which stands for for Economic Development for a Growing Economy, according to the Chicago Tribune. The program grants tax breaks to companies that create jobs in Illinois.
Outcome entered into the EDGE agreement in November 2016 and promised to add at least 175 new full-time jobs in 2017 and 2018. Outcome installs video screens in medical offices, while pharmaceutical companies pay to run ads on the screens aimed at waiting patients.
Per an October report in The Wall Street Journal, the company allegedly misled advertising pharmaceutical companies by charging them for ads on more screens than the company had installed. Outcome employees were also accused of supplying inflated metrics on how well ads performed and provided inaccurate reports regarding where the ads ran and how effective the ads were.
Units of Goldman Sachs, Alphabet and Pritzker Group Venture Capital, among others, have filed a lawsuit in New York state court against Outcome, CEO Rishi Shah and current President Shradha Agarwal.
“Anytime that a company gets into legal trouble, almost always when the Department of Justice opens an investigation, we just suspend them for safety precautions, simply protecting taxpayer money,” Jacquelyn Reineke, a spokeswoman for the Illinois Department of Commerce and Economic Opportunity, told the Tribune.
The tax credit would have been worth about $6.1 million to the Chicago based startup over 10 years. Outcome Health had not collected any of its credits.
Despite the legal action, Outcome has said it believes in the long-term success of the business.
“The company is well-positioned for success with its customers, is signing up new customers, and is committed to the ongoing expansion of its network of more than 145,000 devices at medical offices around the country,” Outcome spokesperson John Eddy told the Tribune.
(PHOTOS VIA OUTCOME HEALTH | © GENSLER CHICAGO)
