In Outcome Health trial, defense tries to prove witness was responsible for fraud, not company founders – Chicago Tribune newstrendslive

A former, young executive at Outcome Health — who is now a star witness in the fraud trial against its founders — was to blame for misdeeds at the company, not its CEO, defense attorneys set out to prove Monday morning.

Witness and former Outcome executive Ashik Desai faced questions from a defense attorney Monday morning in the federal criminal trial of former Outcome CEO Rishi Shah, former President Shradha Agarwal and former Chief Operating Officer and Chief Financial Officer Brad Purdy. The cross examination came after a week in which Desai testified for the prosecution, detailing his role, and Shah, Agarwal and Purdy’s alleged parts, in what prosecutors say was a $1 billion fraud scheme.

Desai’s testimony in the case, against his former bosses, is expected to be pivotal, with defense attorneys blaming the alleged fraud on Desai and prosecutors saying Desai was merely following his bosses’ lead. Desai has already pleaded guilty to one count of wire fraud and struck a deal with the government to testify in exchange for a potentially reduced sentence.

Former Outcome Health CEO Rishi Shah arrives for jury selection in a criminal fraud trial on Jan. 24, 2023.

Outcome was once one of the most talked-about tech companies in Chicago, rising to a valuation of more than $5 billion at one point. The company placed screens and tablets in doctors’ offices and waiting rooms that ran educational content and pharmaceutical ads. Federal prosecutors, however, allege that Shah, Agarwal and Purdy lied about how many doctors’ offices had screens and tablets running their content and then used those exaggerated numbers to overcharge drug companies for advertising and inflate revenue figures used to get loans and raise money from investors.

Shah, Agarwal and Purdy now face charges of mail fraud, wire fraud and bank fraud. All three have pleaded not guilty to the charges, some of which carry sentences of up to 30 years in prison.

When Desai was on the stand last week, he described how the company would run pharmaceutical companies’ ads on fewer screens than promised, yet still charge the drug companies the full amounts. Prosecutors showed the jury strings of emails between Desai, Shah, Agarwal and Purdy discussing the issue while they were at the company. Desai, now age 30, was 20 years old when he started working full-time at Outcome, which was then called ContextMedia.

On Monday morning, a defense attorney for Shah led Desai through a different set of questions, aiming to show that Desai committed fraud, while lying to and keeping information from Shah.

Shah’s attorney John Hueston showed Desai emails between him and analysts who worked under him, in which Desai instructed them to falsify numbers or explicitly approved of the behavior.

Former Outcome Health President Shradha Agarwal arrives for jury selection in a criminal fraud trial on Jan. 24, 2023.

“Once you hired those young people in, it was you who corrupted each one of those in your team,” Hueston said.

Desai confirmed Monday that he taught them the corrupt practices, but maintained that he was merely extending “business practices that had been taught to me.”

“I was part of the business practices, and I led the team that was doing it, but it was not just me,” Desai said.

Hueston, however, then showed Desai a list of analysts who had left the company, with many of them expressing concern with the way Outcome did business. Under questioning, Desai said that he didn’t recall discussing many of their departures with Shah.

“I would often talk around the problem with Rishi where I would not confirm their accusations,” Desai said. Desai acknowledged on the stand that he lied to Purdy when he was asked if he had fabricated return-on-investment reports, and he lied to Shah when, on one occasion, he said he had been operating with integrity.

Hueston also pressed Desai for details about the plea deal he struck with the government. Under the deal, the government is expected to recommend a reduced amount of time in prison if Desai cooperates and testifies truthfully in the trial, though the sentence will still be up to a judge. Without the deal, Desai may have faced decades in prison.

“The only way out for you was to try to make the case against others,” Hueston said.

“No, it was only to tell the truth,” Desai responded.

Defense attorneys, including those for Agarwal and Purdy, are expected to continue cross-examining Desai this week. The trial began Jan. 30 and is expected to last for as long as 14 weeks.

Outcome and its leaders have faced a number of legal actions in recent years, following a 2017 Wall Street Journal article that exposed the alleged fraud at the company.

Outcome settled a lawsuit by investors in early 2018, after investors alleged the company misled advertisers and investors about the company’s performance. At that point, Shah and Agarwal stepped down from daily 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 agreement, Outcome admitted that from 2012 to 2017, former executives and employees “perpetrated a scheme to defraud its clients — most of which were pharmaceutical companies — by selling advertising inventory that it did not have,” the Justice Department said in a news release.

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

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