Rishi Shah, a 38-year-old Indian American has been handed a seven-and-a-half year prison sentence for running a $1 billion (about ₹8,300 crore) fraud at his Chicago-based advertising startup Outcome Health.
What Happened: Shah has been convicted of defrauding his investors, including firms like Goldman Sachs, Alphabet and Illinois Governor JB Pritzker's venture capital firm, according to a Bloomberg report.
Prosecutors described Shah as the "driving force behind a dizzying array of lies to clients, lenders, investors and an audit firm."
During his college days in 2006, Shah founded Outcome Health at Northwestern University. At the time, it was known as Context Media Health.
The company aimed to transform medical advertising by installing televisions in doctors’ offices to show targeted health advertisements to patients. By the mid 2010s, Outcome Health had emerged as a major player in the technology and healthcare investment sectors, attracting substantial investments and clientele.
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Though the firm boasted about exponential revenue growth, it was actually mired in fraudulent activity. Shah, with his co-founder Shradha Agrawal and CFO Brad Purdy reportedly manipulated Outcome Health’s operational and financial status. The company is said to have exceeded its capacity to broadcast advertisements and deceived clients such as pharmaceutical giant Novo Nordisk regarding the scale of its television network in doctors’ offices.
Having amassed hundreds of billions of dollars through ad sales Shah led a lavish lifestyle, the report added. This included weekend getaways at private yachts and jets and a $10 million (₹83 crore) mansion.
Outcome’s fraudulent activities were exposed in a 2017 Wall Street Journal report. Subsequently, a consortium of funds, including those managed by Goldman, Alphabet and Pritzker, filed lawsuits against Outcome.
In 2023, Shah was convicted along with Agarwal and Purdy. Separately, the US Securities and Exchange Commission also sued the three, along with former chief growth officer Ashik Desai, for allegedly using false financial statements to raise cash.
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