Opening arguments begin in Outcome Health fraud trial in Chicago – Chicago Tribune

The former leaders of Outcome Health were greedy crooks, the government argued during opening arguments in their criminal trial Monday morning, while defense attorneys portrayed them as serious executives who were defrauded by their subordinates.

The three defendants — former Outcome Health CEO Rishi Shah, President Shraddha Agarwal and CEO Brad Purdy — are on trial in Chicago on charges of bank fraud, mail fraud and wire fraud.

The federal government alleges the trio was involved in a $1 billion fraud scheme. Outcome placed screens and tablets in doctors’ offices and waiting rooms that played educational content and pharmaceutical ads. But federal prosecutors allege the three lied about how many doctors’ offices had screens and tablets displaying their contents. The government claims they then used these inflated numbers to charge drug companies for advertising and inflate revenue figures used to obtain loans and raise money from investors.

All three pleaded not guilty to the charges. Some of the charges against them carry sentences of up to 30 years in prison. The process is expected to take up to 14 weeks.

During opening arguments Monday morning, attorneys made clear that much of the trial will focus on what the three knew and didn’t know about the alleged fraud.

“This trial is about ambition, greed and fraud,” said Kyle Hankey, an attorney for the government. “This lawsuit is about lies told by ambitious, young entrepreneurs to propel their company to commanding heights.”

Hankey told the jury during opening arguments that Shah, Agarwal and Purdy sold advertising inventory they did not have, billed pharmaceutical clients as if they had delivered the advertising in full, lied to banks and investors and then acted to to keep customers, banks and investors from learning the truth.

Hankey told the jury they will see text and voice messages between the defendants, as well as hear testimony from former Outcome employees.

One of those former employees, Ashik Desai, is expected to be a star witness in the trial. Desai has already pleaded guilty to one count of wire fraud.

Much of the case will likely hinge on whether Desai was a naïve, impressionable pawn in the alleged scheme or the mastermind.

Desai is expected to testify that Outcome told the drug company’s customers that it had screens in more doctor’s offices than it actually did and did not provide enough advertising campaigns while billing customers as if it did in full, according to a court filing by the government. He is also expected to testify about alleged attempts to defraud an outside auditor who audited Outcome’s business, and that he repeatedly presented misleading ROI results to clients.

Former Outcome Health President Shradha Agarwal arrives for jury selection in a criminal fraud trial at the Dirksen U.S. Courthouse on January 24, 2023.

In his opening arguments, Hanky ​​described Desai as a “perfect fit” for Shah and Agarwal’s alleged fraud scheme. Desai was only 20 years old when he started working at Outcome, and he looked to Shah as a mentor, Hankey said.

“They found a willing student in Desai who wanted to please his new teacher,” Hankey said.

The defense, however, portrayed Desai as a master con man who duped his bosses while he carried out the alleged fraud.

Shah’s lawyer, John Huston, called Desai a “miracle” who impressed his bosses and won their trust. They believed him even when he allegedly falsified ROI reports, Houston said.

“Did Mr. Shah trust people he shouldn’t have? Yeah, and he’s going to have to live with that,” Houston said. “But what he didn’t do was commit fraud.”

Houston argued Monday morning that Shah has shown a pattern of trying to get to the bottom of problems at the company while dealing with operational challenges accompanying Outcome’s rapid growth — contrary to the government’s contention that Outcome leaders sidelined whistleblowers.

“There’s no way for the CEO to know what every single one of these people does every day,” Houston said of the company’s 500-plus employees, at the top.

Opening arguments are expected to continue Monday afternoon, with attorneys for Agarwal and Purdy presenting their defenses. A former executive, Samir Kazi, is also expected to testify on Monday.

Outcome and its former leaders have already spent years embroiled in lawsuits. Outcome settled an investor lawsuit in early 2018 after investors alleged the company misled advertisers and investors about the company’s performance. At that point, Shah and Agarwal stepped back from the day-to-day operations of the company and six months later resigned from their board positions.

In 2019, Outcome as a company agreed to pay $70 million to pharmaceutical companies to resolve a federal fraud investigation. As part of the settlement, Outcome admitted that from 2012 to 2017, former executives and employees “perpetrated a scheme to defraud their clients — most of whom were pharmaceutical companies — by selling advertising inventory they did not have,” it said Department of Justice in a news release.

In March 2021, Outcome combined with PatientPoint to create a new company called PatientPoint Health Technologies.

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