Outcome Health founder Rishi Shah has been convicted of fraud. Now prosecutors are going after his money and his house.
The government wants to seize $55 million from Shah that it says can be traced to fraud committed against customers and investors of Outcome Health, a healthcare-advertising company he founded with Shradha Agarwal. Prosecutors are seeking $13.7 million from Agarwal, who is not contesting the forfeiture, according to a court filing. Shah is contesting the government’s request.
Prosecutors froze $10 million when Shah and Agarwal were indicted in 2019. In a forfeiture hearing scheduled for this morning, the Justice Department will try to convince U.S. District Judge Thomas Durkin that there is more money to be had.
Shah, Agarwal and Brad Purdy, Outcome Health’s former chief operating officer, were convicted in April of more than a dozen counts of fraud each after a 10-week trial at the Dirksen Federal Courthouse. Alongside Theranos founder Elizabeth Holmes, who recently began serving an 11-year sentence, Outcome Health was one of the biggest fraud cases involving a startup.
Shah, Agarwal and Purdy face up to 30 years in prison each when they’re sentenced in the fall.
In the meantime, prosecutors are going after money Shah and Agarwal received with dividend payments as part of the transactions with investors and lenders. Purdy did not receive payouts.
Prosecutors said Outcome Health billed drug makers, such as AbbVie, for millions more in advertising than they received, inflating the company’s revenue by about 25%.
Investors relied on those financials to put more than $600 million into the company in 2016 and 2017. Those investors included Goldman Sachs, Google and Pritzker Group Venture Capital, which Gov. J.B. Pritzker ran before he took office, and lenders including J.P. Morgan Chase.
Shah and Agarwal initially received $262 million in dividends before investors sued and recovered all but about $69 million. Shah owned 80% of the company. Among Shah’s assets that prosecutors want forfeited are his mansion at 924-926 N. Clark St., $10.5 million in venture capital investments and $17.6 million in cash.
This story first appeared in Crain’s Chicago Business.