Former Outcome Health execs hit with grand jury indictments over ad fraud scandal

The company's former CEO, president and CFO are each facing multiple counts of wire fraud, bank fraud and mail fraud, among other charges.
By Dave Muoio

Outcome Health the entity may be nearing the end of its legal woes, but some of the individuals wrapped up in the company’s ad scandal aren’t quite out of the woods yet.

A recently unsealed criminal indictment filed in the Northern District of Illinois outlines charges against former CEO and cofounder Rishi Shah, former president and cofounder Shradha Agarwal, former CFO Brad Purdy and former EVP Ashik Desai.

Shah is facing 12 counts of wire fraud, two counts of bank fraud and two counts of money laundering. Agarwal is chared with nine counts of wire fraud, six counts of mail fraud and two counts of bank fraud. Purdy is facing six counts of wire fraud, six counts of mail fraud, two counts of bank fraud and one count of false statements to a financial institution. Desai is charged with one count of wire fraud.

“The defendants were charged with allegedly over-inflating the company’s revenue figures in order to fraudulently obtain loans from banks,” Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG), said in a statement. “This scheme was orchestrated by former leaders of the organization who personally benefitted from hundreds of millions of dollars. We are committed to working with our law enforcement partners to investigate individuals involved in the crime and to preserve the integrity of the banking system.”

In addition, Kathryn Choi, a senior analyst, and Oliver Han, an analyst, are each charged in the same district with a single count of conspiracy to commit wire fraud.

Statements from the defendants’ legal councils being reported in mainstream media indicate that the former Outcome executives are planning to contest their charges in court.

"[Shah] did not commit these offenses and denies the government’s charges against him,” Shah’s legal council said in a statement obtained by Crain’s Chicago Business. “He is being scapegoated for the wrongdoing of others who have cut deals with the government to reduce their own exposure. Mr. Shah will plead not guilty to these charges because he is, in fact, not guilty of any of them. He looks forward to his day in court and the opportunity to clear his name.”


In 2017, a Wall Street Journal report outlining persistent manipulation of advertisement performance data at Outcome was a hard hit for the former tech industry darling. Following investor lawsuits, lost clients and a federal investigation, the company agreed to a $70 million settlement and admission of guilt last month with hopes of starting fresh.

So far it doesn’t seem like it will be as easy for the major names tied to the scandal to do the same. In the Department of Justice’s announcement, officials said that these charges are necessary to ensure other startups don’t attempt similar tactics.

“Outcome’s former executives and employees allegedly deceived lenders, investors, and their own auditors by falsely representing revenue for additional profit,” Principal Deputy Assistant Attorney General John P. Cronan, of the Justice Department’s Criminal Division, said in a statement. “The charges announced today demonstrate that lies and deception cannot serve as the basis for any company, including startup companies, to falsely grow revenue for additional capital and private gain.”


Outcome Health’s troubles began the same year as its $500 million raise, which at the time brought the company to a valuation of roughly $5 billion. In the months following the scandal, the advertiser lost several high-profile business partners; reached an investor settlement that saw cofounders Rishi Shah and Shrada Agarwal step down from their respective CEO and president positions and eventually depart; settle a completely separate class action suit for $2.9 million; and in June of 2018 appoint McNally to the CEO position.

With all that in mind, it’s not surprising that company has lately been focused on transforming its public image.

“I think it’s easy to lose sight of the purpose and mission and people you’re actually there to serve,” Outcome COO Nandini Ramani, who served as the interim leader of the company amidst the shakeup, said earlier this year at CES 2019’s Digital Health Summit. “This last year has been a year of rebuilding, creating infrastructure, ensuring that we have all of the guardrails, data infrastructure, to actually report and ensure not just our paying clients, but also our providers.”