Outcome Health Co-Founder Rishi Shah Sentenced To 7.5 Years Jail Time For Fraud

July 1, 2024 by Dave Haynes

The sad downfall of a once rising star in the digital out of home sector hit a big milestone last week, with Rishi Shah, the co-founder and once CEO of Outcome Health, being sentenced to 7.5 years in jail for fraud.

Rishi Shah had founded what was at first known at ContextMedia as a condition-specific waiting room information network, putting screens in waiting rooms to educate people dealing with chronic medical issues like diabetes and rheumatoid arthritis. The company made its money by selling advertising to directly interested manufacturers, most notably big pharma. ContextMedia  was eventually re-branded as Outcome Health, and was a big star on the Chicago tech and adtech scenes, even acquiring naming rights on a downtown office tower.

By 2017, Outcome had some 500 staffers, and had raised about $1 billion from investors and lenders. With 80% ownership in Outcome, Forbes magazine had Shah pegged as a billionaire by age 31.

Things started to unravel in late 2017 after news reports surfaced, alleging fraud. Shah and two other Outcome executives were accused of misrepresenting the network’s real footprint, and therefore the number of viewers. Prosecutors suggested torqued ad performance numbers were used to overcharge advertisers, and inflate revenue figures put in front of lenders and investors.

The charges eventually were heard in court and last spring, a jury found Shah and two other former Outcome leaders – Shah’s co-founder and former Outcome President Shradha Agarwal and former COO and CFO Brad Purdy – were found guilty. Shah was guilty on 19 of 22 counts. 

MOST of the reporting on this case is paywalled and I don’t have much ongoing use for reading Illinois business news and court briefs. But I was able to determine without spending money that COO/CFO Purdy was sentenced to two years on jail. while Agarwal was convicted but did not get any jail time.

The U.S. District Court judge on the case told Shah during sentencing that he was not persuaded by any suggestions Shah’s actions were bad mistakes or impulses.  “A lot of this I believe was driven by greed … dreams of being a big shot,” said Judge Thomas Durkin.

Shah, prior to sentencing, told the court he was deeply sorry to those who invested their money and careers in his company.  “In my head and heart I feel tremendous responsibility for what happened at Outcome Health.”

One of his lawyers, William Burck, told the judge Shah made mistakes, but wasn’t trying to rob people. “This was not a person who had had 10, 20, 30 years of experience in business,” Burck said. “This was a person who was in his 20s trying to build something from scratch … and was growing fast, probably too fast for the capabilities he had and his colleagues had.”

Shah’s legal team also tried to reduce the sentencing hit by providing letters of support from extended family the Chicago tech community, with other CEOs and investors saying he was a very positive force, for years, in Chicago’s tech start-up ecosystem.

I knew Shah in the early days of the company. He and Agarwal dropped out of Northwestern in 2006 to found ContextMedia (along with Derek Moeller, who left in 2009, long before the fraud issues surfaced).

Shah hit me as earnest, seeing a way to build a business while also helping educate people as they sat, perhaps nervously, waiting for medical appointments. His father was an endocrinologist, and his grandparents and a younger sister had diabetes. The idea with ContextMedia was to provide information in context for people receiving healthcare, and ideally change behaviors and lives.

What I liked was the narrow focus and mission, and how sales was all about playing the deep-pocketed drugs and medical device manufacturers off each other to get the cost-per-thousand ad prices up much higher than they would be for more generalized ad networks, which might sell to Pfizer, but also to consumer brands and anyone with an ad budget.

The company was getting into a sector dominated by Accent Health, a Florida company that had been around since the mid-1990s and had many thousands of screens in medical offices around the U.S. But by 2016, Context Media had acquired Accent, and a year later, it rebranded as Outcome.

I must admit the company looked like it was maybe getting a little out over its skis, as the saying goes, when in 2017 it secured naming rights to an office building and announced a five year plan to grow 5X in headcount. It wasn’t long after that when the fraud stories started circulating.

About three years ago, Outcome Health was “combined” with PatientPoint in a strategic transaction, and the blended entity now operates as PatientPoint.

Shah is appealing his conviction.

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