An appellate court has upheld the fraud convictions of the two former top executives at Outcome Health — a once-prominent Chicago tech company.
A three-judge panel for the 7th U.S. Circuit Court of Appeals on Thursday affirmed a jury’s decision from more than three years ago to convict the executives on multiple counts of fraud.
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After a 10-week-long trial in 2023, the jury found Outcome co-founder and former CEO Rishi Shah and co-founder and former President Shradha Agarwal guilty of 19 and 15 counts, respectively.
Shah was sentenced in 2024 to 7½ years in prison, and Agarwal was sentenced to three years of confinement at a halfway house. Both have remained free as their appeal proceeded.
Outcome was once a star of Chicago’s tech scene, selling advertising to pharmaceutical companies, with the ads running on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms.
The company grew from 16 employees in 2011 to more than 500 employees in 2017, with a reported valuation of more than $5 billion. Over time, Outcome raised nearly $1 billion from lenders and high-profile investors, including a fund co-founded by Gov. JB Pritzker and units of Goldman Sachs and Google.
But the company’s meteoric rise ground to a halt after a former Outcome analyst contacted the Wall Street Journal with allegations that the company was misleading pharmaceutical companies and inflating data.
During the 2023 trial, prosecutors alleged that Shah, Agarwal and a third executive, Brad Purdy, lied about how many doctors’ offices had screens and tablets running their content. Prosecutors said they then used those false numbers to overcharge drug companies for advertising, and bloated revenue figures used to get loans and raise money from investors.
Purdy was also convicted in the scheme, but was not part of the appeal decided Thursday.
Shah and Agarwal had argued in their appeal, in part, that they weren’t able to hire their preferred lawyers for the trial because the government improperly froze too many of their assets before the trial began. The government admitted that some of the money it froze turned out to be unconnected to the fraud, according to court documents.
The appellate court, however, wrote in its opinion that though what happened in the pretrial freezing of assets was “complicated and troubling,” the lower court was correct in deciding that Shah and Agarwal received enough information about the issue to have challenged it before the original trial.
“We are deeply disappointed by the court’s ruling, which imposes no consequence for the government’s admittedly illegal restraint of funds Mr. Shah needed to fund his defense,” said Shah’s attorney Richard Finneran, a partner with Bryan Cave Leighton Paisner, in a statement Friday. “We will seek further review, if necessary in the Supreme Court, to ensure that Mr. Shah’s constitutional rights are vindicated.”
The appellate opinion also noted that the “thrust of the evidence” showed that Shah and Agarwal knew Outcome could not deliver on its promises “and yet continued inducing contracts using projected inventory figures and pursued external financing using false financial information.
“This is not a case, in short, where the defendants under-delivered once or twice,” the opinion states. “But after years of under-delivery, the knowledge that they could not timely perform became undeniable and supported a finding of intent to defraud.”
Attempts to reach an attorney for Agarwal were not immediately successful Friday afternoon.