Three former executives of Chicago-based Outcome Health (OH), a healthcare technology company, were sentenced for misleading an auditor, clients, lenders, and investors about a scheme to sell $45 million in overbilled advertisements.

Rishi Shah, OH’s former chief executive, and Brad Purdy, its former chief financial officer, will serve seven and half years and two years and three months, respectively, in prison, the Department of Justice (DOJ) announced Monday in a press release. Shradha Agarwal, OH’s former president, will serve three years in a half-way house.

The details: Starting in 2006, Context Media which later changed its name to Outcome Health, installed televisions and tablets in doctor’s offices nationwide and sold advertising on the screens to drug companies and other businesses, the DOJ said.

OH sold more advertising than it had room for, with clients paying for ads that never appeared. The company overbilling clients by $45 million from 2011-17, the DOJ said.

The trio of execs also misled lenders and investors, who provided $1 billion to the company, the DOJ said.

The company overstated its revenue for 2015 and 2016, with an outside auditor only signing off “because Purdy caused others to fabricate data to conceal the under-deliveries,” the DOJ said.

The execs used the inflated revenue figures and audited financial statements to raise debt financing of $110 million in April 2016 and $375 million in December 2016, along with $487.5 million in equity financing in early 2017, the DOJ said.

In April 2023, the execs were convicted  on multiple charges that included mail fraud, wire fraud, bank fraud, making false statements to a financial institution, and money laundering.

Other former employees pleaded guilty and are awaiting sentencing following probes by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, with assistance from the Securities and Exchange Commission.

“Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years,” said Nicole Argentieri, head of the DOJ’s Criminal Division, in the release. “Their sentences should serve as yet another reminder that ‘faking it until you make it’ is not an acceptable practice for any business, whether that company is a technology start-up or a well-established corporation.”

Outcome Health could not immediately be reached for comment.

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