A former Chicago billionaire has been sentenced to seven and a half years in prison for running a $1 billion fraud scheme at an advertising startup. This startup had big-name investors like Goldman Sachs, Google parent Alphabet Inc., and Illinois Governor JB Pritzker’s venture capital firm.
Rishi Shah, 38, co-founded Outcome Health, which placed ads on TVs in doctors’ offices. He was found guilty last year of multiple fraud and money laundering charges. Along with two other executives from Outcome Health, Shah was sentenced in Chicago by US District Judge Thomas Durkin, according to the US Attorney’s Office.
Prosecutors had asked for a 15-year sentence, saying Shah was the main person behind a lot of lies to clients, lenders, investors, and an audit firm. Shah and the other executives lied to pharmaceutical companies about placing ads and then misled investors about the company’s health.
Before the fraud was exposed in a 2017 Wall Street Journal article, Shah was becoming a big name in Democratic circles. He started Outcome Health—initially called Context Media Health—in 2006 while at Northwestern University. The company grew quickly, and Shah’s profile rose with it, earning praise from then-Mayor Rahm Emanuel.
However, the company’s growth was based on fraud. Outcome Health sold more ads than it could show and lied to clients like pharmaceutical giant Novo Nordisk A/S about the number of TVs in doctors’ offices. This brought in a lot of cash, allowing Shah to live a luxurious lifestyle with private yacht and jet trips and a $10 million home. By 2016, Shah’s net worth was falsely reported as over $4 billion.
“Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri. She emphasized that pretending to be successful until you actually are is not acceptable in business.
In court, Shah expressed shame and embarrassment for failing to manage the company’s rapid growth, which led to many mistakes, including falsifying data.
Shah was convicted in April 2023 along with Outcome President and co-founder Shradha Agarwal and Chief Financial Officer Brad Purdy. Prosecutors sought 10-year sentences for Agarwal and Purdy. However, Agarwal received three years in a halfway house, and Purdy got two years and three months in prison.
Investors, including funds from Goldman Sachs, Alphabet, and Pritzker, sued Outcome Health in 2017 over fraud related to a $487.5 million fundraising that led to a $225 million payout for Shah and Agarwal. Additionally, the US Securities and Exchange Commission sued Shah, Agarwal, Purdy, and former Chief Growth Officer Ashik Desai for using false financial statements to raise cash. Desai and two other Outcome employees pleaded guilty before the criminal trial against the company’s top executives.