Guilty verdicts came down for three former Outcome Health executives on Tuesday, reported the The Wall Street Journal.
The once celebrated startup was a rare Chicago "unicorn" tech company but was later disgraced in a massive fraud scandal.
The jury found Outcome co-founder and former CEO Rishi Shah guilty on 19 of 22 counts, while co-founder and former president Shradha Agarwal was found guilty on 15 of 17 counts, the Chicago Tribune reported on Tuesday. Brad Purdy, Outcome's former chief operating officer and chief financial officer, was also found guilty on 13 of 15 counts.
Founded in 2006 by Shah and Agarwal, and originally called Context Media, Outcome Health sold ads on screens in doctors' office waiting rooms and on exam room wallboards. It became Chicago's most valuable tech startup in 2017 when it raised $487 million at a roughly $5 billion valuation. A short time later, the walls started to cave in.
Outcome Health was sued by its investors for fraud later that year after the Wall Street Journal reported that several Outcome employees misled advertisers on the effectiveness of the company’s ads.
After the company agreed to pay $70 million as a result of a Department of Justice fraud investigation in 2019, Shah and Agarwal were charged in federal court along with former Outcome CFO Purdy and Executive Vice President Ashik Desai, for their role in a "massive fraud" scheme where Outcome clients were allegedly over-billed for ads that were never delivered, and revenue figures were allegedly falsified in an effort to raise nearly half a billion dollars from outside investors.
The DOJ investigation said that of the $487 million equity investment, $225 million went directly to Shah and Agarwal.
Desai pleaded guilty to the charges in 2019 and struck a deal to testify against his former bosses in exchange for a reduced sentence. Shah, Agarwal and Purdy, however, pleaded not guilty to the charges now face several years in prison as a result of their convictions.
None of the three testified during the trial, which took 10 weeks, according to The Wall Street Journal.
Matt McNally was brought in as Outcome Health’s CEO in 2018 after Shah and Agarwal stepped down from their day-to-day roles. The next year, the company sold a majority stake to private equity firm Littlejohn & Co. and later merged with PatientPoint in a deal that eliminated Outcome's name.
