Outcome Health Fraud Trial: Prosecution Closes Case

Outcome Health built a network of TVs and computer screens in doctors’ offices and charged pharmaceutical companies millions of dollars to advertise on them. Co-founders Rishi Shah and Shradha Agarwal and former COO Brad Purdy are accused of selling stock the company didn’t have, overbilling pharmaceutical clients, inflating Outcome Health’s financial results, which were used to raise nearly $1 billion. in the form of loans and investments from Google Capital G and other investors.

It is unclear how much of the case the defense teams plan to collect when the trial resumes next week. Lawyers for Shah and Agarwal said they would decide this weekend whether their clients would testify. Pardy’s lawyers said it was unlikely that he would defend his position.

If they decide not to testify, closing arguments could take place as early as Tuesday, with the case going to a jury by the end of the week. If that happens, the trial, which was originally supposed to last 14 weeks, could go to a jury as early as nine.

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Already, the defense teams have decided not to call in the experts in accounting and the world of fast-growing startups that they planned before the trial.

The government has the burden of proving that Shah, Agarwal and Pardi are guilty of fraud, deliberately defrauding clients and investors for personal gain. Defendants very often don’t file a case, says Renato Mariotti, a former federal prosecutor who is now a partner at Bryan Cave Leighton Paisner.

“When considering whether to present a defense and how broad the defense should be, defense attorneys focus on the strength of the government’s case,” Mariotti said. “If the government’s case is very weak, an argument can be made for not putting forward any defense case at all.

“Ironically, the incentive to make a broad defense is highest when the government’s case is very strong. If a guilty verdict seems almost certain, it might be worth trying Hail Mary.

As with most white collar fraud cases, the lawsuit was long and complicated. Witnesses, including several employees of Outcome Health, delved into the intricacies of digital advertising contracts and accounting.

More than 1,300 pieces of evidence are involved in the case, ranging from emails and text messages to spreadsheets and voice messages. Both sides chose different documents – often different parts of the same long chain of emails – to give jurors very different versions of events.

In just one instance, prosecutors singled out an email from Agarwal to Ashik Desai, the head of Outcome Health, who pleaded guilty in the case and agreed to testify as evidence of intent to commit fraud and hide it from others.

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“Every time we have a discussion about what data to use, let’s remove the seller from the chain. I have noticed that their level of confidence in our data changes drastically when presented to clients if they believe it is accurate and not made up.”

The defense, however, highlighted another part of the email in which Agarwal explained why she chose a higher figure from the study than employees found for the sales presentation.

“I don’t always share the backend thinking with (salespeople) about how we come up with a number (same with lists when we design), but I have a pattern of how I do it.”

Defense lawyers must decide whether to throw the dice at them, believing that they have raised reasonable doubt and the government has not proved their case, or try to prove their clients’ innocence and possibly allow them to testify.

Traditionally, defendants rarely testified in criminal trials because this opened them up for cross-examination by prosecutors.

“More and more it is becoming the norm. It used to be illegal,” says Kevin O’Brien, a former U.S. attorney who works as a defense officer at Ford O’Brien Landy in New York. “If things are going badly, then why not? You need a Hail Mary. This can only be achieved if the client convinces the jury.”

It didn’t work for Elizabeth Holmes, founder of medical startup Theranos, who opposed but was convicted of fraud and sentenced to 11 years in prison a year ago. If their guilt is proven, Shah, Agarwal and Pardi face up to 30 years in prison.

This story first appeared in Crain’s Chicago Business magazine.