Indian-American Man's ₹ 8,300 Crore Fraud Scheme Shakes Top US Investors

New Delhi: An Indian-American businessman Rishi Shah, the former billionaire cofounder of Outcome Health, has been sentenced to seven and a half years in prison by a US court. The saga involves a ₹ 8,300 crore ($1 billion) fraud scheme that shook high-profile investors like Goldman Sachs Group Inc., Google parent Alphabet Inc., and Illinois Governor JB Pritzker's venture capital firm. The verdict, handed down by US District Judge Thomas Durkin, closed the lid on one of the largest corporate fraud cases in recent history. 

According to a Bloomberg report, Outcome Health was a brainchild of Mr Shah during his university days. Originally known as Context Media Health, the company was founded in 2006 with a vision of changing medical advertising through installing televisions at doctors' offices to stream health ads targeted at patients. Mr Shah was joined by his co-founder Shradha Agrawal, and the growth for the company became exponential as far as valuation was concerned, all in the quest to bridge the communication gap between patients and healthcare providers innovatively through ad placements.

By the mid-2010s, Outcome Health had emerged as a big player in the tech and healthcare investment communities. The promise of meshing cutting-edge technology into traditional healthcare marketing beckoned high-profile investors. During its meteoric rise, Outcome was securing enormous funds and clientele, placing Mr Shah as a rising star in Chicago corporate circles.

Lies And Deceit

But behind the glittering success, Outcome Health's foundations were rotting. Prosecutors said Mr Shah, 38, along with Ms Agarwal and another defendant, chief financial officer Brad Purdy, engaged in a scheme of monumental fraud against investors, clients, and lenders by misrepresenting the operational and financial health of the company. At the centre of the fraud was selling more advertising inventory than could be delivered by Outcome Health, and fabricating data to cover up the shortfall.

It defrauded pharmaceutical giant Novo Nordisk A/S and other clients about its network size and ad reach. Misleading information, combined with fraudulent data, painted a picture of exponential revenue growth that beguiled further investment or financial backing.

Mr Shah lived life to the fullest because the money rolling in from the inflated ad sales and financing from investors was huge. Reports exposed this spending habit, featuring exotic trips with private jets and yachts, even the purchase of a $10 million home. In 2016, Mr Shah's net worth was pegged at more than $4 billion, reflecting an amount depreciated and inflated by a raft of duplicitous accounting practices.

The facade began to crumble in 2017 when a media expose by the Wall Street Journal brought the fraudulent activities into light.