CEO in major health-advertising fraud gets 7.5-year prison sentence

livemint.com:

CHICAGO—Tech entrepreneur Rishi Shah was sentenced to seven-and-a-half years in prison Wednesday for his part in what prosecutors called a billion-dollar fraud scheme centered on video advertisements in doctors’ offices. Federal Judge Thomas Durkin said Shah, former chief executive and co-founder of startup Outcome Health, had undermined the integrity of the markets. “The only deterrence to white-collar crime or any kind of crime is jail," he said.

“It’s the only thing that gets people’s attention." Outcome installed video screens in physicians’ offices and charged pharmaceutical companies such as Novo Nordisk and Bristol-Myers Squibb to run drug ads targeted at patients in the waiting room. Prosecutors said company leaders misled clients, auditors, lenders and investors about how many offices had received the screens, and inflated the supposed effectiveness of its advertising. The Wall Street Journal revealed the fraud in a 2017 article that cited former employees as well as advertisers.

In a court document filed Monday, prosecutors said Shah and former Chief Financial Officer Brad Purdy were fixated on finding the leak, and that Purdy said he was talking to a security company started by “Israeli special forces people." Prosecutors in 2019 indicted Shah, Purdy and former President Shradha Agarwal, alleging a nearly $1 billion scheme to defraud clients and investors, including Goldman Sachs and an investment firm founded by Illinois Gov. J.B. Pritzker.

A jury last year found Shah, Purdy and Agarwal guilty of numerous criminal counts of wire, mail and bank fraud. A fourth executive, Ashik Desai, served as the government’s chief witness and received a reduced sentence in exchange for his testimony. Agarwal and Purdy are