Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 1 of 58 PageID #:132
`
`-r&{Grsr&{*
`
`o u RKIN
`dHHE
`--* c'u^o&Y.s
`
`Superseding Indictment
`No. 19 CR 864
`
`Violations: Title 18, United States
`Coile, Sections 1014, L34L, L343, t344,
`1e57
`
`))
`
`UNDER SEAL
`
`V.
`
`RISHI SHAH,
`SHRAD}IA AGARWAL,
`BRAD PURDY, and
`ASHIK DESAI
`
`rrRr cr
`N'RTHERN DISTRI.T oF ILLIN,IS
`EASTERN OTTruSTON
`UNITED STATES OF AMERICA )
`)
`
`)
`)
`))
`COUNT ONE
`
`/FIL ED
`NO\/ 2 I 2019
`
`The SPECIAL MAY 2019 GRAND JURY charges:
`1. At times material to this Indictment:
`'
`Releuant Indiuiduals and Entities
`a. Outcome Health ('Outcome") was a privately held healthcare
`information and. ad.vertising company with its head.quarters in Chicago, Illinois.
`
`THOMAS G. BRUTON
`CLERK, U.S. DISTRTCT COURT
`
`Prior to January 2077,it was known as ContextMedia.
`b. Defendant RISHI SIIAH ("SIIAH") was Outcome's co-found.er and
`
`Chief Executive Officer. SHAH owned approximately 8a% of Outcome.
`c. Defendant SHRADIIA AGAR\MAL ('AGARWAL") was Outcome',s
`.
`presid.ent. AGARWAL was branded as a co-founder of Outcome. AGARWAL owned
`
`approximately 20o/o of Outcome Hea1th.
`d. Defend.ant BRAD PURDY ('PURDY',) was Outcome',s chief
`
`Operating Offi.cer and Chief Financial Officer-
`e. ASHIK DESAI ('DESAI") was Outcome's Executive Vice
`
`President of Sa1es and Analytics.
`
`
`
`-r&{Grsr&{*
`
`o u RKIN
`dHHE
`--* c'u^o&Y.s
`
`Superseding Indictment
`No. 19 CR 864
`
`Violations: Title 18, United States
`Coile, Sections 1014, L34L, L343, t344,
`1e57
`
`))
`
`UNDER SEAL
`
`V.
`
`RISHI SHAH,
`SHRAD}IA AGARWAL,
`BRAD PURDY, and
`ASHIK DESAI
`
`rrRr cr
`N'RTHERN DISTRI.T oF ILLIN,IS
`EASTERN OTTruSTON
`UNITED STATES OF AMERICA )
`)
`
`)
`)
`))
`COUNT ONE
`
`/FIL ED
`NO\/ 2 I 2019
`
`The SPECIAL MAY 2019 GRAND JURY charges:
`1. At times material to this Indictment:
`'
`Releuant Indiuiduals and Entities
`a. Outcome Health ('Outcome") was a privately held healthcare
`information and. ad.vertising company with its head.quarters in Chicago, Illinois.
`
`THOMAS G. BRUTON
`CLERK, U.S. DISTRTCT COURT
`
`Prior to January 2077,it was known as ContextMedia.
`b. Defendant RISHI SIIAH ("SIIAH") was Outcome's co-found.er and
`
`Chief Executive Officer. SHAH owned approximately 8a% of Outcome.
`c. Defendant SHRADIIA AGAR\MAL ('AGARWAL") was Outcome',s
`.
`presid.ent. AGARWAL was branded as a co-founder of Outcome. AGARWAL owned
`
`approximately 20o/o of Outcome Hea1th.
`d. Defend.ant BRAD PURDY ('PURDY',) was Outcome',s chief
`
`Operating Offi.cer and Chief Financial Officer-
`e. ASHIK DESAI ('DESAI") was Outcome's Executive Vice
`
`President of Sa1es and Analytics.
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 2 of 58 PageID #:133
`
`f.
`
`Executive A was Outcome's Chief Operating Offrcer during
`
`January 20L7.
`g. Executive B was Outcome's Chief Operating Officer d.uring part
`
`of20L7.
`
`h. Executive C was Outcome's Chief People Officer'
`i.
`Executive D was Outcome's Director of Client Success.
`j.
`Controller A was Outcome's Controller'
`k. Marketing Sciences SVP A was Outcome's Senior Vice President
`
`of Marketing Sciences.
`I.
`chief of staff Awas sHAH',s Chief of staffat outcome.
`m. Chief of Staff B was AGARWAL s Chief of Staff at Outcome.
`n. Analysts A, B, C, and D were sales Analysts at Outcome.
`o.
`Salesperson A was an Outcome salesperson who sold advertising
`
`space on Outcome's screens to Outcome's clients.
`p. Employee A and Employee B were employees at outcome.
`q. Pharma A, Pharma B, Pharma C, and Pharma D were
`pharmaceutical companies ("pharma clients") that contracted for
`advertising
`
`.
`
`campaigns with outcome, either directly or through an ad agency.
`r.
`
`Investor A, Investor B, and. Investor C were venture capital
`
`investors.
`
`s. Entity A was a potential investor that was solicited by Outcome
`
`but did not invest in Outcome.
`
`2
`
`
`
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`Auditor A was an outside auditor that audited Outcome's 2015
`
`and 2016 fi.nancial statements.
`u. Headhunter A was the headhunting firm that placed Executive
`
`A, among others, at Outcome.
`v. Bank A, Bank B, Bank C, Bank D, Bank E, and Bank F were
`
`fi.nancial institutions within the meaning of 18 U.S-C. S 20.
`w. Voxer w.as an application that permitted users to exchange voice
`and text messages. Outcome executives and employees, including SHAH,
`
`AGARWAL, PURDY, and DESAI, used Voxer to communicate with each other.
`
`Outcome Health
`
`Outcome placed television screens, tablets, and wallboards that
`
`displayed educational content into doctor's offrces and then sold, advertising space on
`
`those devices to pharma clients and other clients. This was referred. to as "point-of-
`
`care" advertising.
`
`The clients that contracted with Outcome typically signed
`
`v.
`contracts that specified the length of the advertising campaign and the number of
`screens, tablets, and wallboards on which, and the frequency with which, the
`ad.vertisements were supposed to run. Some of Outcome's contracts with clients
`
`contained return-on-investment ("ROI") guarantees, tytrlically guaranteeing that the
`
`ad.vertising campaigns would deliver two or three dollars of additional revenue for
`
`every dollar spent on advertising.
`
`
`
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`z.
`In negotiating such a contract, a pharma client, or the media
`agency negotiating on its behalf, typically sent Outcome a list of specific doctors that
`
`the company wanted to target with its proposed advertising campaign. The targeted
`doctors typicatly were high-prescribing doctors in the medical specialties likely to
`prescribe the clients' respective drugs. Outcome responded by representing the
`number of targeted doctors and/or doctor's offrces which were actually within its
`
`network. This was referred to as the "list-match"' process'
`aa. While the advertising campaigns were actually being run, many
`pharma clients---or the media agencies working on their behalf-required Outcome
`
`to provide them with proofs of performanqe ('POPs") on a monthly basis. These POPs
`were usually affi.davits signed by an Outcome employee stating that the
`advertisements had run on the contracted number of screens. Outcome also provided
`some clients with reports reflecting information regarding patients' engagement with
`
`Outcome's tablets.
`bb. Outcome agreed, to have third-party companies, including
`Measurement Company A, measure the performance of its advertising campaigns
`and provide that information to its clients. Measurement Company A, which had
`d.ata showing the quantities of d.rugs prescribed. by specific health care provid,ers,
`cond.ucted studies that evaluated the effectiveness of an advertising campaign by
`
`comparing the prescribing behavior of doctor's offices exposed to the advertisements
`against a group of similar d.octor's offi.ces where the advertisements did not run.
`These studies were used. to calculate the ROI for the advertising campaigns-
`
`4
`
`
`
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`Measurement Company A sent the results of the studies to Outcome, which later
`provided" the results to its clients. These studies were typically referred to as
`
`"performance studies," "ROI reports," or "Measurement Company A reports."
`cc. Outcome maintained an offi.ce in New York City that was
`primarily d.evoted to sales of advertising to pharma clients and to the media agencies
`that represented the pharma clients. The Outcome team that called the doctor's
`offi.ces to pitch installation of televisions, tablets, and wallboards was based in
`
`Outcome's Chicago office.
`dd. It was material to Outcome's clients that Outcome actually had
`in its inventory the doctors and doctors' offi.ces that Outcome represented that it had
`d.uring the list-match process; that Outcome ran the clients' advertisements on the
`number of TVs, tablets, and./or wallboards that were set forth in the contracts; that
`
`Outcome ran the clients' advertisements on the contracted number of devices during
`the entire time period set forth in the contract; that Outcome ran the clients'
`ad.vertisements with the frequency set forth in the contract; that Outcome ran the
`clients' ad.vertisements in the doctor's offiges that Outcome represented it would
`during the list-match and contracting process; that Outcome met or exceeded any
`ROI guarantee set forth in a contract; that Outcome did not run competitors'
`advertisements on the same devices if the contract so-provided; and that Outcome
`
`accurately reported patient engagement metrics for tablets.
`
`5
`
`
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`Reuenue Recognition
`ee. Revenue recognition was the practice of recording and reporting
`
`the revenue a company earned in its accounting records and financial statements.
`
`Outcome claimed. to follow Generally Accepted Accounting Principles ("GAAP") when
`
`recording and reporting its revenue. Under GAAP, Outcome earned revenue, and
`thus revenue could be recognized, when it performed according to the terms of its
`
`contracts with clients, including by d,elivering the advertisements to the contracted.
`
`Under GAAP, if Outcome did not run the advertisements on the
`
`number of screens and by achieving the ROI guarantee, if the contract contained one.
`tr
`number of screens or offi.ces required. by the contract, it could not recognize the entire
`amount of revenue for the contract. It could recognize only the amount of revenue
`that was propoftional to the number of screens or offices where it delivered the
`advertisements. If Outcome did not achieve the contracted ROI guarantee for an
`
`advertising campaign, Outcome could not recognize the entire amount of revenue for
`
`that contract. If the ROI was not achieved, then Outcome had to provide a "make
`
`good^" to the client, either in the form of a cash refund proportional to the shortfall on
`
`the revenue guarantee or additional free advertising (a "media credit") proportional
`
`to the shortfall. Any make good. required deferring a proportional amount of the
`
`contract into the next year, or until whenever the obligation was satisfied.
`
`Th,e Fraudulent Scheme
`
`2. Beginning no later than 2011 and continuing until at least 2OL7, at
`
`Chicago, in the Northern District of Illinois, Eastern Division, and. elsewhere,
`
`6
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 7 of 58 PageID #:138
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`RISHI SHAH,
`SHRAD}IA AGARWAL,
`BRAD PURDY, and
`ASHIK DESAI
`defend.ants herein, along with others known and unknown to the Grand Jury,
`knowingly d,evised, intended to devise, and participated in a scheme to defraud
`Outcome's clients, lend.ers, investors, and auditors and to obtain money and property
`by means of materially false and. fraudulent pretenses, representations, and
`
`promises, as further described below.
`B.
`It was part of the scheme that RISHI SHAH, SHRADHA AGARWAL,
`BRA.D PURDY, ASHIK DESAI, and others, in order to obtain millions of dollars from
`clients and. to maintain the appearance of extraordinary revenue gtowth, knowingly
`did the following: (a) falsely represented. to Outcome's clients that Outcome had in its
`network specifi.c doctors and. doctor's bffices that the clients were targeting for
`advertising; @) Iied to clients about how many screens the clients' advertisements
`were running on; (c) falsely inflated patient engagement metrics associated with
`Outcome tablets; (d) caused material under-delivery on Outcome's advertising
`campaigns with its clients; (e) caused clients to pay for advertising that was not
`delivered"; (0 caused the material inflation of revenue in Outcome's fi'nancial
`statements; and (g) used Outcome's inflated. fi.nancial statements to obtain a $110
`million loan in April 20L6, a $3?5 million loan in December 20L6, and $487.5 million
`in equity financing ir-2oir7. To conceal the scheme, sHAH, AGARWAL, PURDY, and
`DESAI did the following: (a) marginalized, undermined, and ignored whistleblowers
`who raised concerns about the fraud; (o) hid the under-delivery on the advertising
`
`
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`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 8 of 58 PageID #:139
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`campaigns from Auditor A; and (c) at times siloed information by directing Outcome
`
`employees not to include the Outcome salespeople who were interacting directly with
`
`the clients on certain communications, such as internal emails regarding making up
`
`data that would be presented to clients and emails about the numbers of screens being
`
`installed in doctor's offices.
`
`Ouerselling Inuentory
`
`4.
`
`It was further part of the scheme that SHAH, AGARWAL, PURDY,
`
`DESAI, and others sold and caused others to seII inventory to clients that Outcome
`
`did not have. During the list-match process, when clients sent Outcome a list of
`
`specifi.c doctors or doctor's offices that the clients wanted to target with an advertising
`
`campaign, SIIAH, AGARWAL, PURDY, DESAI, and others who worked at. their
`
`direction inflated the match on certain occasions by falsely representing that
`
`Outcome had in its network a higher number of doctors or offices on the clients' lists
`
`than it actually had.
`5.
`
`It was further part of the scheme that when some clients asked not only
`
`for the number of doctors and d.octor's offrces that Outcome matched during a list
`
`match but also asked which specific doctors and doctor's offices had matched against
`
`Outcome's network, SIIAH, AGARWAL, PURDY, DESAI, and others who worked at
`
`their direction falsely indicated. that certain offi.ces and doctors were in Outcome's
`
`network when that was not true and on other occasions falsely claimed that Outcome
`
`could not provide the client with the list of doctors and offices due to privacy concerns.
`
`8
`
`
`
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`6.
`It was further part of the scheme that, to conceal misrepr'esentations
`made during the list-match process and to maintain the client relationship, SIIAH,
`AGARWAL, PURDY, DESAI, and others who worked at their direction made sure
`that subsequent lists shared during a later list match with the same client included
`the same offices and doctors that were represented. to have been in Outcome's
`network during a Prior list match
`
`(Jn der - deliuerY and Deltas
`
`7.
`It was further part of the scheme that, as a result of SIIAH, AGARWAL,
`pURDy, and DESAI's practice of selling and. causing others to sell inventory that
`
`Outcome did not have, Outcome under-d.elivered on its advertising campaigns. The
`under-d.elivery-which was the difference between the contracted number of screens
`or offices and. the actual number of screens or offices in which Outcome was running
`
`the campaigns-was sometimes referred to as a "deIta" or a "gap."
`'
`8.
`It was further part of the scheme that SIIAH, AGARWAL, PURDY,
`DESAI, and others at Outcome were aware of the campaign deltas and kept track of
`the deltas in emails and spread"sheets, which were sometimes referred to as "d'e1ta
`
`reports," and other times as "growth mod.els'"
`g.
`It was further part of the scheme that despite the under-delivery on
`ad.vertising campaigns, sHAfI, AGARWAL, PURDY, DESAI, and others working at
`their direction caused monthly affidavits to be sent to clients that falsely represented
`that Outcome had performed its contractual obligations by running advertisements
`
`on the contracted number of screens and offices'
`
`I
`
`
`
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`10. It was further part of the scheme that despite the under-delivery on the
`advertising campaigns, sIIAII, AGARWAL, PURDY, DESAI, and others working at
`their d.irection caused clients to be invoiced. on a monthty basis as if the campaigns
`had run on the contracted number of screens and of6.ces and knowing that these
`invoices served as representations that the campaigns were running as contracted.
`11. It'was further part of the scheme that even if Outcome had sufficient
`total inventory to run an ad.vertising campaign, on certain occasions it did not have
`aII of the specific offi,ces and. doctors that the clients believed they had purchased
`during the list-match process, and SIIAH, AGARWAL, PURDY, DESAI, and others
`working at their d.irection caused the advertising campaigns to run in these "off-
`target" of6,ces while concealing from clients that such substitutions had occurred'
`
`False Tablet Metrics
`L2. It was further part of the scheme that, after Outcome started- to install
`tablets in exam rooms in approximately late 2013 or early 20L4, PURDY, DESAI, and
`others working at their d.irection, with the knowledge and. approval of AGARWAL,
`provided" clients with inflated patient engagement metrics regarding how frequently
`patients interacted with outcome's tablets, including the number of clicks by
`
`patients.
`
`Inflation of Reuenue and Deceiuin'g Auditors
`13. It was further part of the scheme that SHAH, AGARWAL, PURDY, and
`DESAI knowingly concealed. and caused to be concealed the extent of the under-
`
`10
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 11 of 58 PageID #:142
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`delivery from Controller A, other members of Outcome's Accounting Department, and
`
`Auditor A in the following ways:
`a. SHAII, AGARWAL, PURDY, and DESAI falsely represented and
`caused. to be falsely represented that Outcome's contracts with clients permitted
`
`initial under-delivery if it was made up with later over-delivery-what was referred
`to as "weighted average" delivery-when pharma clients had not approved of such
`d.elivery. As a result, Controller A, Outcome's Accounting Department, and Auditor
`A did not know about the extent of Outcome's under-delivery on advertising
`campaigns or that the under-d.e1ivery was concealed from clients, causing Outcome
`to recognize revenue for advertising campaigns in periods for which the revenue
`
`should not have been *""o,gnir"d, and to report false and materially inflated revenue
`
`in its fi"nancial staterrients.
`b.
`In response to requests from Auditor A for proof that Outcome
`had delivered on its obligations und.er the contracts with pharma clients, DESAI, in
`consultation with PURDY, instructed. analysts to fabricate lists of locations where
`Outcome's devices had supposedly played the clients' advertising content to make it
`appear to Auditor A, Controller A, and Outcome's Accounting Department that
`Outcome had. satisfied its contractual obligations, causing Outcome to recognize
`
`revenue for advertising campaigns in period"s for which the revenue should not have
`been recognized, and to report false and materially inflated revenue in its financial
`
`statements.
`
`11
`
`
`
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`14. It was further part of the scheme that, for the purpose of inducing
`Aud.itor A to approve Outcome's financial information for 2OLb and 20L6 so that
`Outcome could provid.e to lenders and investors audited financial statements with
`
`fraudulently inflated. revenue, SIIAH, AGARWAL, and PURDY falsely stated to
`Auditor A during annual fraud inquiry meetings, that if an individual at Outcome
`
`acted. unethically, that individual would be terminated immediately.
`It was further part of the scheme that, for the purpose of inducing
`lb.
`Auditor A to approve Outcome's financial information for 2015 and 2016 so that
`Outcome could. provid,e to lenders and. investors audited fi.nancial statements with
`fraudulently inflated revenue, SIIAH, AGARWAL, and PURDY falsely stated to
`Auditor A during annual fraud inquiry meetings that they were not aware of any
`fraudulent activities occurring at Outcome during the years 20t5 and 2016, with the
`exception of one d.isclosure in 2015 that was not related to the allegations in this
`
`indictment.
`16. It was further part of the scheme that, for the purpose of inducing
`Aud.itor A to approve Outcome's financial information for 2015 and 2016 so that
`Outcome could. provide to lend.ers and investors audited financial statements with
`fraud.ulently inflated revenue, SHAH, AGARWAL, and. PURDY knowingly signed
`
`Auditor A management representation letters in which they falsely and fraudulently
`
`confirmed, for example, that: (i) SIIAH, AGARWAL, and PURDY had no knowledge
`
`of any fraud or suspected fraud affecting Outcome involving management, employees
`
`who had significant roles in Outcome's internal control over fi.nancia1 reporting, or
`
`t2
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 13 of 58 PageID #:144
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`others, where the fraud could have a material effect on the financial statements; and
`
`(ii) SIIAH, AGARWAL, and PURDY had no knowledge of any allegations of fraud or
`
`suspected fraud affecting Outcome's financial statements communicated by
`employees, former employees, or involving others; knowing that those
`
`representations were false and misleading.
`
`$110 Miltion Loan
`17. It was further part of the scheme that in or around March and April
`2016, in order to obtain a $110 million loan from Banks A, B, C, D, and E-in the
`
`form of a $90 million term loan and a $20 million line of credit-SIIAH and PURDY,
`
`with AGARWAL's knowledge and approval, provided and caused to be provided to
`
`the lenders materially false and mislead.ing financial information regarding
`
`Outcome, including (a) audited and interim financial statements for 201-4 and 2015
`
`that reflected false and materially inflated reyenue numbers, and @) audited
`
`fi.nancial statements for 2015 whose approval by Auditor A had been obtained by false
`
`statements and omissions to Auditor A. The term loan resulted in a payment of a
`
`$30.2 million dividend to SHAH and a $7.5 million divid.end to AGARWAL.
`18. It was further part of the scheme that on or about March 15, 2016,
`
`SIIAH and PURDY provided and caused to be provided to the lenders a PowerPoint
`
`presentation that they knew contained materially false financial information
`
`regarding Outcome, including false and inflated revenue numbers.
`19. It was further part of the scheme that on or about March 16, 2016,
`
`PURDY provid.ed. and caused to be provid.ed to the lenders a borrower authorization
`
`13
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 14 of 58 PageID #:145
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`Ietter that stated that the information Outcome provided to the lenders did not
`
`contain any untrue statement of material fact or omit to state a material fact
`
`necessary to make the statements contained not materially misleading, knowing that
`
`the statement was false because Outcome had provided materially false and
`
`misleading information to the lenders.
`20. It was further part of the scheme that on or about April 8,2OL6,in order
`
`to obtain the $110 million loan, Outcome, with PURDY.as signatory, entered into a
`
`Credit Agreement with the lenders that contained statements that SIIAH and
`
`PURDY knew were false and misleading, including representations (a) that
`
`Outcome's 20L5 fi.nancial statements fairly presented, in material respects, the
`
`financial positions of Outcome in accordance with GAAP, and (b) that none of the
`
`reports, financial statements or other written information provided to the lend.ers
`
`contained. any material misstatement of fact or omitted to state any material fact
`
`necessary to make the statements not misleading.
`2L. It was further part of the scheme that SIIAH and PURDY concealed and
`caused to be concealed from lenders that Outcome sold inventory it did not have to
`
`clients, under-delivered on advertising campaigns, and hid the under-delivery from
`
`its clients.
`
`$375 Million Loan
`22. It was further part of the scheme that in or around November and
`December 2}l6,in ord.er to obtain approximately $375 million-in the form of a $325
`
`million term loan and a $50 million line of credit-from a group of lenders, comprised
`
`L4
`
`
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`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 15 of 58 PageID #:146
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`of Banks A, B, and F, and a consortium of debt investors, SIIAH and PURDY, with
`AGARWAL's knowledge and approval, provided and caused to be provided to the
`
`lenders materially false and mislead.ing financial information regarding Outcome,
`
`including (a) audited and interim financial statements for 20L4, 2015, and 2016 that
`
`reflected. false and materially inflated revenue numbers, and (b) audited fi-nancial
`
`statements whose approval by Auditor A had been obtained by false statements and
`
`omissions to Auditor A. The debt investors provided the majority of the capital for
`the g325 million term loan; Banks A, B, and F provided the line of credit. SHAH,
`PURDY, and AGARWAL used the term loan proceed.s to fi.nance the acquisition of
`
`AccentHealth, another point-of-care vendor, and refi.nance the April 20LG loans.
`23. It was further part of the scheme that, in ord.er to have Outcome's debt
`rated. and to obtain the $375 million loan, SIIAH and PURDY made a presentation
`to rating agencies and Bank A on o* uilorrt November 7, 2016, and' made false
`statements during the presentation, including false and misleading statements about
`
`Outcome's revenue.
`24. It was further part of the scheme that on or about November 8, 20t6,
`PURDY provided and caused to be provided to the lenders and debt investors a
`
`PowerPoint presentation that he knew contained false and misleading information,
`
`including false statements about Outcome's revenue.
`25. It was further part of the scheme that during a presentation SHAH and
`PURDY mad.e to lend.ers and debt investors on or about November 29, 20\6, SHAH
`
`15
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 16 of 58 PageID #:147
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`and PURDY made false and misleading statements, including false statements about
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`Outcome's revenue-
`26. It was further part of the scheme that in or around November 20L6,
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`SHAH and PURDY provid.ed and caused to be provided to the lend.ers and d.ebt
`
`investors Outcome's audited fi.nancial statements for 20t3, 2014, and 201"5, and
`
`interim fi.nancial statements for 20L6, knowing that the fi.nancial statements
`
`contained false information, including false and materially inflated revenue numbers.
`27. It was further part of the scheme that on or about December 23, 20L6,
`
`in order to obtain the $375 million lourr, Outcome, with SIIAH as signatory, entered
`
`into a Credit Agreement with the lenders that contained statements that SIIAH and
`
`PURDY knew were false, including the representations (a) that Outcome's 20L3,
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`2014, 20t5'and 2016 (through September 30, 2016) financial statements fairly
`
`presented. the fi.nancial condition of Outcome and were prepared in accordance with
`
`GAAP, and (b) aII written information made available to the lenders was correct in
`
`all material respects and did not contain any untrue statement of material fact or
`
`omit to state any material fact neceqsary to make the statements not misleading.
`28. It was further part of the scheme that SIIAH and PURDY concealed and
`
`caused to be concealed from lend.ers and debt investors that Outcome sold inventory
`it did not have to clients, under-d.elivered on advertising campaigns, and hid the
`
`under-d.elivery from its clients.
`
`16
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 17 of 58 PageID #:148
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`$487.5 Million, Capital Raise
`29. It was further part of the scheme that, in order to obtain approximately
`
`9437.5 million from equity investors between March and JuIy 2017, SIIAH and
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`PURDY, with AGARWAL's knowledge and approval, provided" and caused to'be
`
`provided to the equity investors materially false and misleading information
`
`regarding Outcome, including (a) audited and interim financial statements for 2014,
`
`20L5, and 2016 that reflected false and materially inflated revenue numbers, and (b)
`
`audited. financial statements whose approval by Auditor A had been obtained by
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`material false statements and omissions to Auditor A. The capital raise resulted in
`
`a9225 million dividend payment to an entity under SHAH and AGARWAL's control,
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`for the benefi.t of SIIAH and AGARWAL.
`30. It was further part of the scheme that SHAH and PURDY concealed and
`caused to be concealed from investors that Outcome sold inventory it did not have to
`
`clients, under-delivered on advertising campaigns, and hid the under-delivery from
`
`its clients
`
`Concealmerlt
`31. It was further part of the scheme that SHAH, AGARWAL, PURDY,
`
`DESAI, and others working at their direction misrepresented, concealed, and hid,
`
`and caused to be misrepresented, concealed, and hidden, acts done in furtherance of
`
`the scheme and. the purposes of those acts, such as the following:
`a. SHAH, AGARWAL, PURDY, and DESAI marginalized.,
`
`und.ermined, and ignored whistleblowers who raised concerns about the scheme. For
`
`L7
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 18 of 58 PageID #:149
`
`example, in or around 2015, when Analyst A raised concerns to AGARWAL about the
`
`deltas and Outcome's practice of selling inventory that it. did not have, AGARWAL
`
`respond"ed by saying that Outcome threw "smoke bombs," that others could not see
`
`what was happening behind the smoke, and that everything would be fixed by the
`
`time the smoke cleared.
`b. SHAH, AGARWAL, PURDY, ANd DESAI AT tiMES SilOEd
`information at Outcome, including by directing Outcome employees not to share
`information regarding the numbers of screens being installed in d.octor's offices with
`the Outcome salespeople in the New York offi.ce who were dedicated to selling
`advertising on those screens to clients and by directing Outcome employees not to
`include Outcome salespeople on emails when they discussed making up data to
`
`present to clients. For example, in an August 8, 201"3 email to SIIAH and DESAI,
`
`AGARWAL stated. in part: "Guys - any time we're having a back and forth discussion
`on what d.ata to use, let's take the SS [sponsorship sales] person off the chain. I've
`noticed. their confidence level in our data change d.ramatically when presenting to
`
`clients if they believe it's accurate vs made-up."
`c.
`SIIAH, AGARWAL, PURDY, DESAI, and others working at their
`d.irection discouraged. clients from conducting their own internal studies of the
`performance of Outcome's advertising campaigns, as such studies could reveal
`Outcome's und"er-delivery and misrepresentations to clients about where the
`advertising campaigns were running. SHAII, AGARWAL, PURDY, DESAI, and
`others working at their direction instead encouraged clients to allow Outcome to
`
`18
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 19 of 58 PageID #:150
`
`direct Measurement Company A to conduct the performance studies, which gave
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`Outcome greater control over the performance studies and how the results of the
`
`studies were presented to clients.
`d. DESAI fraudulently altered key performance metrics in
`Measurement Company A reports prior to sending them to clients in order to conceal
`
`the campaign d.eltas and to make it appear that the advertising campaigns were more
`
`effective than they actuallY were.
`e. After SHAH and AGARWAL heard reports that DESAI was
`altering the Measurement Company A reports, SHAH and AGARWAL did not
`
`confront DESAI about it. Instead, SHAH protected. DESAI and.Iater, after Executive
`
`A resigned., placed DESAI back in charge of operations at Outcome.
`f.
`certain aspects of the fraud" scheme at Outcome, SHAH and AGARWAL falsely
`portrayed themselves as victims of rogue employees to Outcome's investors and
`
`After publication of an October 2OL7 newspaper article about
`
`lenders.
`
`. g. SHAH lied to Outcome's employees at an Outcome Health Town
`HaIl on or about October 12,20L7, which was the day the newspaper article about
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`the fraud at Outcome was published. Specifically, when asked, "When were the
`allegations of [Measurement Company A] third-party results' manipulation first
`raised. to you?," SIIAH falsely responded, "We learned. about this specific concern
`
`through the internal review process about a few weeks ago . . . ."
`
`19
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 20 of 58 PageID #:151
`
`Execution of Seherne
`32. On or about February 2, 20L5, at Chicago, in the Northern District of
`
`Illinois, and elsewhere,
`
`RISHI S}IA[I,
`SHRADIIA AGARWAL, and
`BRAD PURDY,
`
`d.efend.ants herein, along with others known and unknown to the Grand Jury, for the
`
`purpose of executing the above-d.escribed scheme, knowingly caused to be delivered
`
`by the United States Mails, according to the direction thereon, an envelope addressed
`
`to Chicago, Illinois, containing a check payable to ContextMed.ia, Inc. for $53,790,
`
`which was payment for an advertising campaign for DrugA, which was manufactured
`
`by Pharma A;
`
`In violation of fitle 18, United States Code, Section 1341.
`
`20
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 21 of 58 PageID #:152
`
`couNT TwO
`
`The SPECIAL MAY 2OIg GRA.ND JURY further charges:
`1. The allegations in paragraphs 1 through 31 of Count One of the
`
`Ind.ictment are realleged here.
`Z. On or about February 4,20L5, at Chicago, in the Northern District of
`
`Illinois, and elsewhere,
`
`RISHI SIIAH,
`SHRADIIA AGARWAL, and
`BRAD PURDY,
`
`d.efend.ants herein, along with others known and unknown to the Grand Jury, for the
`
`purpose of executing the above-described scheme, knowingly caused. to be delivered'
`
`by the United States Mails, according to the direction thereon, an envelope addressed
`
`to Chicago, Illinois, containing a check payable to ContextMed.ia, Inc. for $22g,L70, '
`
`which was payment for an advertising campaign for Drug B, which was manufactured
`
`by Pharma B;
`
`In violation of Title 18, united. states code, Section 1341.
`
`21
`
`
`
`Case: 1:19-cr-00864 Document #: 14 Filed: 11/21/19 Page 22 of 58 PageID #:153
`
`COUNT THREE
`
`The SPECIAL MAY 2O]'9 GRAND JURY further charges:
`1. The allegations in paragraphs 1 through SL of Count One of the
`
`Indictment are realleged here-
`2. On or about May 4, 20L5, at Chicago, in the Northern District of Illinois,
`
`and elsewhere,
`
`BRAD PURDY,
`defendant herein, along with others known and unknown to the Grand J*y, for the
`purpose of executing the above-described scheme, knowingly transmitted and caused
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`to be transmitted by means of wire communication in interstate commerce certain
`writings, signs,
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