Chicago Jury Finds Founders Of DOOH Network Outcome Health Guilty Of Multiple Fraud Charges
April 11, 2023 by Dave Haynes
The founders of Outcome Health, one of the highest flying Digital OOH start-ups of the 2000s and 2010s, have been found guilty of multiple counts of fraud, and now await sentencing that could see them spending many years behind bars.
A jury in Chicago found Outcome co-founder and former CEO Rishi Shah guilty on 19 of 22 counts, while fellow co-founder and former President Shradha Agarwal was found guilty on 15 of 17 counts.
The jury, which deliberated for two days after a 10 week trial, also found Brad Purdy, the company’s former COO and CFO, guilty on 13 of 15 counts.
Some of the counts carry prison sentences as long as 30 years. No sentencing date has been set, as yet.
The verdicts come roughly five years after news first surfaced about troubles at the company, which started out as Context Media. The company was, and is, focused on messaging and advertising at condition-specific medical clinics on waiting room screens and related technologies, such as tablets, around the offices.
The company was one of the hottest in the Chicago technology scene, even at one point securing naming rights to a downtown office tower. But in 2017, Outcome was accused of misrepresenting the performance and presence of ads on its screen network. At that point, Outcome had about 500 staffers and a reported valuation of more than $5 billion.
With 80% ownership and a net worth of $3.6 billion, Shah was named in 2017 to the Forbes 400 ranking of richest Americans.
Outcome sold advertising to pharmaceutical companies, with the ads running on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms. During the trial, prosecutors alleged that Shah, Agarwal and 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 inflated revenue figures used to get loans and raise money from investors.
Their success, however, began to crumble when a 2017 Wall Street Journal article revealed the alleged problems at Outcome. The company lost business, investors sued, and Shah and Agarwal stepped down. In 2019, Outcome, as a company, agreed to pay $70 million to pharmaceutical companies to resolve a federal fraud investigation. The fraud trial that just concluded focused on Outcome’s three top executives as individuals.
Throughout the case, defense attorneys placed the blame entirely on a fourth former Outcome employee, Ashik Desai. Desai had already pleaded guilty to one count of wire fraud before the trial, and he testified that he falsified screen shots and return-on-investment reports without his bosses’ knowledge.
Defense attorneys argued that the defendants trusted Desai, and he repeatedly reassured them that everything was above-board whenever questions arose.
Government prosecutors tried to poke holes in that theory partly by showing communications between the defendants, and, in some cases, Desai, in an attempt to demonstrate that they were aware of under-deliveries to clients and wanted to fire workers who raised concerns.
Ultimately, the government had to prove the three committed fraud beyond a reasonable doubt, and that they did so knowingly and with intent to defraud.
It was a complex case that featured about 1,500 exhibits, many in the forms of emails, texts and voice messages.
Wow. Just wow. I knew Rishi a little, mostly from trade show chats, and was always impressed with his energy, acumen and mission that blended advertising with efforts to educate people about their conditions and treatments.
I was also enamoured with the business model. While most DOOH networks scrape away month to month to make ad sales targets, Context/Outcome had it reasonably easy selling ad spots because big pharma wanted their “ask your doctor” messaging RIGHT in the waiting rooms of clinics focused on that condition – first diabetes and then other conditions.