World News | Indian-born startup exec convicted on $1 billion corporate fraud charges

NEW YORK, April 12 (PTI) — Two Indian-American executives at a Chicago-based startup have been found guilty by a U.S. federal jury of a $1 billion corporate fraud against the company’s customers, lenders, and investors plan.

Jurors on Tuesday found health tech company Outcome Health co-founder and former CEO Rishi Shah guilty of 19 of 22 counts and co-founder and former president Shradha Agarwal guilty of 17 counts following a 10-week trial Former chief operating officer Brad Purdy was convicted on 13 of the 15 counts.

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Shah, 37, was found guilty of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud and two counts of money laundering.

Agarwal, 37, was found guilty of five counts of mail fraud, eight counts of wire fraud and two counts of bank fraud, while Purdy, 33, was found guilty of five counts of mail fraud, five counts of wire fraud and two counts of bank fraud. fraud, and one count of making false statements to a financial institution.

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The defendants face up to 30 years in prison for each count of bank fraud and 20 years for each count of wire fraud and mail fraud.

Shah carries a maximum penalty of 10 years in prison for each money laundering charge. A sentencing hearing is scheduled for a later date.

The company installed television screens and tablet computers in doctors’ offices across the United States and then sold advertising space on those devices to clients, most of them pharmaceutical companies, according to a statement from the Justice Department on Tuesday.

According to evidence presented at trial, Shah, Agarwal and Purdy sold Outcome’s clients ad inventory that the company didn’t need and then underdelivered in its ad campaigns.

Despite these underdelivery instances, the company still invoiced its customers as if it had been delivered in full.

Shah, Agarwal, and Purdy lied or caused others to lie to conceal the underdelivery of customers and to make it appear as if the company was delivering advertising content to the number of screens in the customer contract.

Purdy and others at the company also inflated metrics designed to show how often patients used the company’s tablets installed in doctors’ offices.

The scheme against the company’s clients began in 2011 and ran through 2017, and resulted in at least $45 million in overcharges for advertising services, according to trial evidence.

Shah, Agarwal and Purdy were also convicted of defrauding the company’s lenders and investors.

Inadequate delivery to the company’s advertisers resulted in the company’s 2015 and 2016 revenues being grossly inflated.

Shah, Agarwal and Purdy used inflated revenue figures in the company’s audited financial statements for 2015 and 2016 to raise $110 million in debt financing in April 2016 and $375 million in December 2016 financing, and raised $487.5 million in equity funding in early 2017.

The trio lied to investors and lenders to conceal their ongoing underdelivery of advertising campaigns for clients.

The $110 million debt financing generated $30.2 million in dividends for Shah and $7.5 million for Agarwal; the $487.5 million equity financing generated $225 million in dividends for Shah and Agarwal.

The verdict is a stunning drop for the trio who were once young stars in Chicago’s tech scene. That could have implications for others in the tech world, with some cases focusing on the fine line between a startup’s typical growing pains and fraud, the Chicago Tribune reported Tuesday.

Shah’s spokesman said in a statement: “Mr Shah is deeply saddened by today’s verdict and will use all means available to overturn it”.

Purdy’s attorney, Theodore Poulos, said in a statement: “We are deeply disappointed by the jury’s verdict in this complex and delicate case, especially given the number of cases raised during the trial. Evidence suggests that certain key information was deliberately withheld from Brad Purdy”

Agarwal’s lawyer declined to comment on Tuesday, the report said.

Three other former Outcome employees pleaded guilty before trial. Former chief growth officer Ashik Desai pleaded guilty to one count of wire fraud.

Former senior analyst Kathryn Choi and former analyst Oliver Han both pleaded guilty to conspiracy to commit wire fraud. Desai, Choi and Han will be sentenced at a later date.

(This is an unedited and auto-generated story from a Syndicated News feed, the body of content may not have been modified or edited by LatestLY staff)