Indian-origin founders of health tech start-up charged in $1 bn fraud
New York: Two co-founders and a former executive of Indian-origin at a health technology start-up have been charged in an alleged $1 billion fraud involving advertising, according to prosecutors.
Rishi Shah, 33, and Shradha Aggarwal, 34, the co-founders of Outcome Health, and former executive Ashik Desai, 26, are among the six people accused of fraud “that targeted the company’s clients, lenders and investors,” the Justice Department said on Monday.
“Outcome’s former executives and employees allegedly deceived lenders, investors, and their own auditors by falsely representing revenue for additional profit,” said Principal Deputy Assistant Attorney General John Cronan.
Outlining the case against them, Brian Hayes, the chief of the criminal division in the federal prosecutor’s office for Chicago, said, “The deception alleged to have been committed by the defendants tricked clients into paying for advertising it failed to deliver and served to falsely inflate the value of Outcome Health.”
The Justice Department said that in 2015 and 2016 they allegedly “perpetrated a fraudulent scheme by selling clients – most of whom were pharmaceutical companies – advertising inventory the company did not have and then under-delivering on its advertising campaigns. Despite these under-deliveries, the company allegedly still invoiced its clients as if it had delivered in full.”
They also allegedly used inflated revenue figures to obtain a total of $972.5 million in debt and equity financing, the department said.
Outcome Health said last month that the company entered into an agreement with the Justice Department under which it agreed not to prosecute the company for the “the past misconduct of the company’s founders and select former employees.”
The company said it also agreed to pay $65.5 million as restitution to its customers.
Oucome Health says it provides television in waiting rooms in health care facilities and tablet for patients in examining and infusion rooms as well wifi for patients.