U.S. charges 3 executives of healthcare technology from Indian origin start up in $1 billion fraud

US attorneys have filed criminal charges accusing Outcome Health leaders of supervising clients and fraudulently obtaining approximately $1 billion in funds, including from major investors.

The federal authorities charged three former Indian-origin executives of a Chicago-based health tech start-up for their suspected involvement in a fraud scheme that involved falsifying the financial performance of the company to raise nearly $1 billion in debt and private equity.

Outcome Health co-founders Rishi Shah, 33, and Shradha Aggarwal, 34, and former executive Ashik Desai, 26, are among six people charged with fraud “that targeted customers, borrowers, and shareholders of the business,” the U.S. Department of Justice said Monday.

Former executives and employees of Outcome knowingly misled creditors, shareholders, and their own auditors by falsely representing additional profit revenue, “said John P Cronan, Senior Deputy Assistant Attorney General of the Criminal Division of the Justice Department.

The charges announced today show that lies and deception can not serve as the basis for any company, including start-ups, to falsely increase revenue for additional capital and private gain, “said Cronan.

Shah and Agarwal cofounded and owned the health care advertising company when the alleged fraud took place in 2015 and 2016.

Between 2011 to 2017, according to the Department of Justice, Outcome’s former executives and workers sold tens of millions of dollars in non-existent commercial stock.

This allegedly resulted in inflated financial statements that were used by former executives in 2016 and 2017 to collect nearly USD 1 billion in debt and equity funding, he said in a statement.

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The deceit allegedly committed by the defendants tricked clients into paying for ads they failed to deliver and helped to falsely inflate the value of Outcome Health, “said Assistant U.S. Attorney Brian Hayes, Chief of the Northern District of Illinois Criminal Division.

“These allegations demonstrate that the FBI and its partners will keep companies accountable for their wrongdoing,” said the FBI’s Chicago Field Office’s Deputy Special Agent in Charge Larry L Lapp.

According to Inspector General Jay N Lerner of the Federal Deposit Insurance Corporation’s Office of Inspector General (FDIC-OIG), the accused were charged with allegedly over-inflating the company’s revenue figures to fraudulently obtain bank loans.

Shah, Agarwal, and Purdy are charged with different charges of mail fraud, wire fraud, and bank fraud. Purdy is also charged with one count of a financial institution’s false statements, and Shah is also charged with two counts of criminal proceeds transactions. Desai, the statement said, is charged with one count of wire fraud.

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