Former Outcome Health CEO Rishi Shah and former president Shradha Agarwal wanted to access $10.3 million the government froze as part of a $1 billion fraud case playing out in Chicago federal court. A federal judge has denied the request.
Judge Thomas Durkin ruled Wednesday that the money was “indisputably derived” from Agarwal and Shah’s alleged fraud, and therefore would remain frozen.
Court documents filed by the former executives’ attorneys in February listed Shah and Agarwal’s assets and argued they cannot pay their attorneys’ fees without the frozen $10.3 million. Shah and Agarwal need “at least” $14 million to $15 million to pay their lawyers, according to the documents.
The government has repeatedly rebuffed that argument, saying both have assets they could sell or use as collateral for loans to pay their lawyers.
Shah and Agarwal collected $225 million from investors, but they paid most of that money back to settle a lawsuit those investors brought. The government had previously argued the $10.3 million was part of a chunk of investor funds that Shah and Agarwal did not pay back, and that the money should be frozen because it was obtained through the alleged fraud.
After declining to rule on the issue at a court appearance in March, Durkin agreed.
The decision is the latest development in an ongoing criminal case against the former executives, which Shah and Agarwal’s attorneys have said they plan to fight.
Outcome Health installs screens in doctor’s offices and waiting rooms that combine health information with drug advertising. Pharmaceutical companies pay Outcome to run the ads and other content on the screens.
The charges allege the former executives ran a massive fraud scheme that brought in $487.5 million in financing, a $110 million loan and a $375 million loan, amounting to nearly $1 billion. The indictment also alleges the executives lied to clients and billed them millions of dollars for ads that never ran.
Also charged in the case is Brad Purdy, who held various roles including chief financial officer and chief operating officer. A fourth former executive who was charged in the case, Ashik Desai, pleaded guilty and agreed to cooperate with the government’s investigation.
Court appearances have been delayed due to the coronavirus pandemic.
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