3 Indian-origin ex-executives of a Chicago-based health tech start-up have been charged by the federal authorities for their alleged roles in a fraud scheme which involved falsifying the company’s financial performance to raise nearly USD 1 billion in debt & private equity.
The co-founders of Outcome Health Rishi Shah, 33, & Shradha Aggarwal, 34, & former executive Ashik Desai, 26, are among 6 people accused of fraud “that targeted the company’s clients, lenders & investors,” the United States Department of Justice said on Monday.
“Outcome’s former executives & employees allegedly deceived lenders, investors, & their own auditors by falsely representing revenue for additional profit,” said Principal Deputy Assistant Attorney General John P Cronan of the Justice Department’s Criminal Division.
“The charges announced today demonstrate that lies & deception cann't serve as the basis for any company, including start-up companies, to falsely grow revenue for additional capital & private gain,” Cronan said.
Shah & Agarwal co-founded the health care advertising company & owned it in 2015 & 2016, when the alleged fraud occurred.
According to the Justice Department, from 2011 to 2017, the former executives & employees of Outcome sold tens of millions of dollars of advertising inventory that didn't exist.
This allegedly resulted in inflated financial statements that the former executives used to raise nearly USD 1 billion in debt & equity financing in 2016 & 2017, it said in a statement.
“The deception alleged to have been committed by the defendants tricked clients into paying for advertising it failed to deliver & served to falsely inflate the value of Outcome Health,” said Assistant United State's Attorney Brian Hayes, Chief of the Criminal Division for the Northern District of Illinois.
“These charges demonstrate that the Federal Bureau of Investigation (FBI) & its partners will hold businesses accountable for their misconduct,” said Deputy Special Agent in Charge Larry L Lapp of the Federal Bureau of Investigation (FBI)’s Chicago Field Office.
The defendants were charged with allegedly over-inflating the company’s revenue figures in order to fraudulently obtain loans from banks, said Inspector General Jay N Lerner of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG).
Shah, Agarwal & Purdy are each charged with various counts of mail fraud, wire fraud & bank fraud. Purdy is also charged with one count of false statements to a financial institution, & Shah is also charged with two counts of transactions in criminal proceeds. Desai is charged with one count of wire fraud, the statement said.
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