SEC Charges Former Outcome Health Execs With $487 Million Fraud
The Securities and Exchange Commission (SEC) recently charged four former Outcome Health executives with misrepresenting the healthcare advertising company as an enormous success to investors while raising almost $500 million for the company. The former executives are CEO Rishi Shah, President Shradha Agarwal, CFO Brad Purdy, and Executive VP Ashik Desai.
According to the SEC, Outcome Health charges pharmaceutical clients to place ads in doctors’ offices. But the SEC alleges that the defendants invoiced clients and booked revenues for ads it never ran. The SEC claims that Outcome Health overstated its 2015 and 2016 revenues in its audited financial statements by approximately $14 million and $30 million, respectively.
The SEC further alleges that the company raised $487 million from investors in a private offering. According to the SEC, the investors relied on the false financial statements and misrepresentations concerning the company’s growth. The SEC alleges that almost half of the funds raised went to the company’s co-founders, Shah and Agarwal.
Steven Peikin, co-director of the SEC’s Division of Enforcement, stated as follows: “[This] action seeks to hold Outcome Health’s most senior executives accountable for an alleged massive fraud. We charge that these C-suite officers defrauded investors out of hundreds of millions — and the co-founders lined their own pockets — through blatant lies about the company’s financial and business performance.”
The SEC’s action is pending in federal court in Chicago. The SEC has charged the defendants with violation of the federal securities laws’ antifraud provisions. In addition, the U.S. Attorney’s Office for the Northern District of Illinois also announced criminal charges against Shah, Agarwal, Purdy, and Desai.
If you believe you have a claim relating to the alleged Outcome Health fraud, please contact one of our Business Trial Group attorneys at 800-816-1031.
As part of the largest contingency law firm in the nation, with more than 500 lawyers and 50 offices, the Business Trial Group helps investors recover their financial losses on a contingency basis. We are only paid if we successfully recover money for you. We regularly battle against brokerage firms, investment advisory firms, and banks, and have helped investors recover tens of millions of dollars of investment losses.