Outcome Health Founders Rishi Shah and Shradha Agarwal Lose Appeal in $1 Billion Fake Ad Inventory Fraud

Case from 2019–2026 (U.S. Attorney's Office latest release: April 11, 2023; later developments are from court records and other sources cited below). Published on Scammers.com Oct. 16, 2026; case status is current as of that date.

Rishi Shah co-founded Outcome Health, a Chicago health technology startup, and served as its CEO. He was sentenced June 26, 2024, to 7½ years in prison for a fraud scheme that targeted the company's advertising clients, lenders and investors and involved about $1 billion in fraudulently obtained funds, according to the Justice Department and the FDIC Office of Inspector General [1] [4]. Co-founder and former president Shradha Agarwal and former COO/CFO Brad Purdy were sentenced the following day. On Aug. 6, 2026, the U.S. Court of Appeals for the Seventh Circuit affirmed Shah's and Agarwal's convictions [5]. Crain's Chicago Business reported that on Oct. 12, 2026, the court declined to rehear the appeal [6].

How the scheme worked

According to the trial evidence, as described by the Justice Department [1] [4]:

1. Screens in doctors' offices. Outcome Health, called ContextMedia before January 2017, installed TV screens and tablets in doctors' offices nationwide. It sold advertising on them, mostly to pharmaceutical companies.
2. Selling ad inventory it didn't have. The executives sold more advertising than the company could deliver, then under-delivered while billing clients as if campaigns had run in full. Employees lied, or were caused to lie, to hide the shortfall. Engagement metrics for the tablets were inflated. Prosecutors said this part of the scheme ran from 2011 to 2017 and overbilled clients by at least $45 million.
3. Inflated revenue and financing. The under-delivery overstated revenue for 2015 and 2016. Purdy caused others to fabricate data so the outside auditor would sign off. The inflated audited financials were then used to raise $110 million in debt in April 2016, $375 million in debt in December 2016 and $487.5 million in equity in early 2017.
4. Payouts to the founders. The $110 million loan led to a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal. The $487.5 million equity raise led to a $225 million dividend that benefited both.

The company. In October 2019, the company (ContextMedia Health LLC, doing business as Outcome Health) entered a non-prosecution agreement and agreed to pay $70 million to pharmaceutical client victims. It admitted that former executives and employees carried out the scheme [3].

The defendants

Convicted at trial (April 11, 2023) [1]:

• Rishi Shah, co-founder and former CEO. Convicted on 5 counts of mail fraud, 10 of wire fraud, 2 of bank fraud and 2 of money laundering. Sentenced June 26, 2024, to 90 months [4]. The Seventh Circuit said he also received three years of supervised release, a $1,900 fine and an order to forfeit $55 million, and that the district court had not yet set restitution [5].
• Shradha Agarwal, co-founder and former president. Convicted on 5 counts of mail fraud, 8 of wire fraud and 2 of bank fraud. The FDIC-OIG said she was sentenced June 27, 2024, to three years in a halfway house [4]. The Seventh Circuit described the sentence as one day of imprisonment plus three years of supervised release, with a $1,500 fine and forfeiture of $13.7 million [5].
• Brad Purdy, former COO and CFO. Convicted on 5 counts of mail fraud, 5 of wire fraud, 2 of bank fraud and 1 of false statements to a financial institution. Sentenced June 27, 2024, to 2 years and 3 months in prison [4].

Pleaded guilty before trial [1]:

• Ashik Desai, former chief growth officer. Pleaded guilty to wire fraud and testified at trial. Crain's reported he was sentenced to seven months in prison [7].
• Kathryn Choi, former senior analyst. Pleaded guilty to conspiracy to commit wire fraud. Crain's reported she received probation [8].
• Oliver Han, former analyst. Pleaded guilty to conspiracy to commit wire fraud. He was sentenced to probation, according to a report carried by Yahoo Finance [9].

The appeal. Shah and Agarwal argued mainly that a pretrial order freezing their assets was overbroad and left them unable to pay their chosen lawyers. The Seventh Circuit called what happened with the asset freeze "complicated and troubling" but found no reversible error and affirmed [5].

The FBI and FDIC-OIG investigated, with help from the SEC [4].

Red flags (for investors and lenders)

• Startup metrics you can't verify independently, such as screen counts, impressions or engagement.
• Huge founder dividends paid out of new financing.
• Whistleblower complaints dismissed or silenced. Prosecutors said the defendants tried to silence whistleblowers [1].

What to do

1. Insist on independent verification of key operating data, not just audited financials built on that data.
2. Check public enforcement records at sec.gov before investing in private companies.
3. Report corporate or securities fraud to the SEC at sec.gov/tcr.

Case status (as of Oct. 16, 2026)

Defendant	Court	Status as of Oct. 16, 2026	Source
Rishi Shah	N.D. Ill. (1:19-cr-00864); 7th Cir. No. 24-2230	Convicted at trial April 11, 2023; sentenced June 26, 2024, to 90 months; affirmed Aug. 6, 2026; rehearing denied Oct. 12, 2026 (news report)	[1], [4], [5], [6]
Shradha Agarwal	N.D. Ill.; 7th Cir. No. 24-2236	Convicted at trial April 11, 2023; sentenced June 27, 2024 (one day plus supervised release; 3 years in a halfway house per FDIC-OIG); affirmed Aug. 6, 2026	[1], [4], [5]
Brad Purdy	N.D. Ill.	Convicted at trial April 11, 2023; sentenced June 27, 2024, to 27 months	[1], [4]
Ashik Desai	N.D. Ill.	Pleaded guilty to wire fraud; sentenced to 7 months (news report)	[1], [7]
Kathryn Choi	N.D. Ill.	Pleaded guilty to conspiracy to commit wire fraud; probation (news report)	[1], [8]
Oliver Han	N.D. Ill.	Pleaded guilty to conspiracy to commit wire fraud; probation (news report)	[1], [9]
ContextMedia Health LLC (Outcome Health)	Non-prosecution agreement	Agreed in Oct. 2019 to pay $70M to pharmaceutical client victims	[3]

Sources

1. U.S. Department of Justice / U.S. Attorney's Office, Northern District of Illinois, "Former Executives of Outcome Health Convicted in $1B Corporate Fraud Scheme," April 11, 2023. https://www.justice.gov/usao-ndil/pr/former-executives-outcome-health-convicted-1b-corporate-fraud-scheme
2. U.S. Attorney's Office, Northern District of Illinois, "Former Executives and Employees of Health Technology Company Outcome Health Charged in $1 Billion Fraud Scheme," Nov. 25, 2019. https://www.justice.gov/usao-ndil/pr/former-executives-and-employees-health-technology-company-outcome-health-charged-1
3. U.S. Attorney's Office, Northern District of Illinois, "Outcome Health Agrees to Pay $70 Million to Resolve Fraud Investigation," Oct. 30, 2019. https://www.justice.gov/usao-ndil/pr/outcome-health-agrees-pay-70-million-resolve-fraud-investigation
4. FDIC Office of Inspector General, "Three Former Executives Sentenced for $1B Corporate Fraud Scheme," July 1, 2024. https://www.fdicoig.gov/news/investigations-press-releases/three-former-executives-sentenced-1b-corporate-fraud-scheme
5. U.S. Court of Appeals for the Seventh Circuit, United States v. Shah and Agarwal, Nos. 24-2230 & 24-2236 (opinion, Aug. 6, 2026), via GovInfo. https://www.govinfo.gov/content/pkg/USCOURTS-ca7-24-02236/pdf/USCOURTS-ca7-24-02236-0.pdf
6. Crain's Chicago Business, "Court declines to rehear Outcome Health appeal from Shah, Agarwal," Oct. 12, 2026. https://www.chicagobusiness.com/technology/ccb-outcome-health-shah-agarwal-appeal-20261012/
7. Crain's Chicago Business, "Outcome Health exec Ashik Desai sentenced to 7 months." https://www.chicagobusiness.com/health-care/outcome-health-exec-ashik-desai-sentenced-7-months/
8. Crain's Chicago Business, "Outcome Health analyst Kathryn Choi gets probation." https://www.chicagobusiness.com/technology/outcome-health-analyst-kathryn-choi-gets-probation/
9. Yahoo Finance, "Second former Outcome Health analyst sentenced to probation, won't go to prison." https://finance.yahoo.com/news/second-former-outcome-health-analyst-201600723.html

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