Former executives of Outcome Health convicted in $1B corporate fraud scheme

They installed displays in medical buildings that sold as space. Then they oversold the ad space, billing customers for ads that were never displayed from 2011 to 2017 and took investment based on the fake numbers.<p>I wonder how the scheme unraveled. It takes a lot of people to cover up a fraud at this scale, so presumably someone noticed and reported it?<p>I really dislike this company. I went to a doctor who had advertising tablets installed in every patient room. Getting blasted with drugs ads while your doctor is 20 minutes late put me over the edge. She was a terrible doctor who tried to prescribe a lot of unnecessary products and services that she, conveniently, sold through the front desk of her office. The ads were a great warning sign that she only cared about extracting as much money as possible from patients.

I always like looking these folks up on youtube to see if they have any interviews, this guy did talk for Chicago Techweek, and his story starts remarkably similar to another tech dude who was recently charged with fraud... goes something like this:<p>(when I was 12) I found some discrepancy in the price of a security, so I wrote a simple program that traded on the discrepancy.<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=GPBoIyA11TI">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=GPBoIyA11TI</a><p>Also this one is amusing given the context &quot;you win if you&#x27;re not afraid to break rules and do things the way they&#x27;re best done in the new reality&quot;<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=wAOa-4vnFWg">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=wAOa-4vnFWg</a>

Well there&#x27;s a blast from the past. Many years ago I worked with the startup company that eventually evolved into Outcome Health. Back then many doctors&#x27; offices still lacked broadband Internet access, especially in rural areas. The business model was to provide free satellite Internet service to doctors by installing a rooftop dish antenna connected to a kiosk in the waiting room. Revenue came from selling video ads displayed on the kiosk screen (mostly prescription drugs) along with looped healthcare videos from CNN.<p>That aspect of the business eventually failed. Some doctors really liked it (the CNN educational content was legitimately pretty good and kept waiting patients from getting bored), but overall it was too expensive to deploy the hardware and geosynchronous satellite Internet service is always slow. As availability of other forms of broadband Internet access improved the satellite service opportunity evaporated. Back at that time I wasn&#x27;t aware of any fraud, just a failed business model.

The sole aim of this company was to extract money from investors...somehow, they managed to raise $500mn, $159mn of which went to the founders for selling secondary shares [1].<p>I really don&#x27;t understand people like this. It&#x27;s far easier to build a serially unprofitable business and cash out your shares...ask Adam Neumann, Travis Kalanick, and the GoPuff founders. Just don&#x27;t lie to investors, pretend you&#x27;re building something real at least.<p>1- <a href="https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;former-outcome-health-executives-found-guilty-of-fraud-912f9bb0" rel="nofollow">https:&#x2F;&#x2F;www.wsj.com&#x2F;articles&#x2F;former-outcome-health-executive...</a>

Even if they hadn&#x27;t committed fraud I am happy that they are in problems. The article says they were selling TVs to hospitals to display ads. The last thing we need is more ads and I hope every company that tries to push ads into new spaces will go bankrupt.

From wikipedia:<p>&gt; Outcome Health is a Chicago-based healthcare technology company founded by Rishi Shah. Its registered name is ContextMedia Health LLC. It is majority owned by Littlejohn &amp; Co., a private equity firm. After its founders were indicted by a federal grand jury on multiple charges of fraud and also sued by the SEC, veteran tech investor Howard A. Tullman called Outcome &quot;our version of Theranos.&quot;<p>&gt; In May 2017, a funding round with Goldman Sachs, CapitalG, Pritzker Group, and others invested $600 million in Outcome Health, giving it a $5.6 billion valuation. This is the largest single funding round in Chicago since Groupon in 2011, when it raised $950 million in its fifth funding round.<p>Private capital investment + healthcare = bad combo

Raising almost a billion US$ in 2016? It seems like a lot for what boils down to &quot;advertising in doctor&#x27;s offices&quot;. Would be interesting to know who the VCs were.

They screwed up by defrauding the investors, I don&#x27;t think they would have gotten caught if they simply stuck to defrauding their clients.<p>I would ask the community here how common this kind of fraud is. Do companies inflate their ad display numbers or ad engagement numbers?

&quot;Following the widely publicized prosecution of Theranos Inc. founder Elizabeth Holmes, the Outcome Health trial was another example of the government taking on what prosecutors in the trial called the technology world&#x27;s &quot;fake-it-till-you-make-it&quot; culture.&quot;<p><a href="https:&#x2F;&#x2F;www.wsj.com&#x2F;amp&#x2F;articles&#x2F;former-outcome-health-executives-found-guilty-of-fraud-912f9bb0" rel="nofollow">https:&#x2F;&#x2F;www.wsj.com&#x2F;amp&#x2F;articles&#x2F;former-outcome-health-execu...</a>

The thing I noticed was that everyone convicted or pleading guilty was from the soft, BS parts of the company. How come none of the Engineers ever get rich in these schemes? What are we doing wrong?

This is the guy who got served and he just said no and fled in his suv right?

<i>Shah was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering. Agarwal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted on five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution. The defendants face a maximum penalty of 30 years in prison for each count of bank fraud and 20 years in prison for each count of wire fraud and mail fraud. Purdy faces a maximum penalty of 30 years in prison for the count of false statements to a financial institution. Shah faces a maximum penalty of 10 years in prison for each count of money laundering. A sentencing hearing will be scheduled at a date to be determined. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.</i><p>damn. they better hope Elon Musk invents life extension or something ..that is a loooong time. Excessive even.

Any jail time for any of them? Until then it&#x27;s just posturing by the Justice department.