Four former executives and two former employees of Outcome Health, a Chicago-based health technology start-up company founded in 2006, were charged in 2019 for their alleged roles in a fraud scheme that targeted the company’s clients – many of whom were pharmaceutical companies – lenders and investors, and involved approximately $1 billion in fraudulently obtained funds.

The executives were in Chicago’s Dirksen Federal Courthouse on Monday to face trial.

Rishi Shah of Chicago, co-founder and CEO of Outcome Health, and Shradha Agarwal, of Chicago, president of Outcome Health were charged along with Brad Purdy of San Francisco, chief operating officer and chief financial officer, and Ashik Desai, of Philadelphia, executive vice president of business operations and, more recently, chief growth officer of Outcome.

Outcome, formerly called ContextMedia, was one of Chicago’s high-flying startups, pulling in $500 million during its first round of funding in May 2017 and attracting high-profile investors like Goldman Sachs and Google’s parent company, Alphabet. The company was valued at $5.5 billion at the time.

The company installs TVs and tablets in physicians’ offices and sells targeted ads to pharmaceutical companies. Outcome’s troubles started in 2017 when The Wall Street Journal reported that the company inflated data to pharmaceutical companies to boost ad sales. Things continued to unravel when the company was sued by investors who wanted to get their nearly $500 million investment back, claiming the company provided investors with fraudulent data and financial reports.

Its business is to run advertisements for different medications on TV screens and tablets in doctor’s offices, in exchange for a fee from the pharma companies whose products are being advertised.

It’s been a successful enough operation that in 2017 the company was valued at $5.5 billion, $3.6 billion of which was personally claimed by the then-31-year-old Shah.

The same year, Outcome received a $500 million investment from Goldman Sachs, Google affiliate CapitalG and the Pritzker Group, a venture capital firm run by the same wealthy family that Democratic Illinois Governor J. B. Pritzker belongs to.

According to the allegations, the former executives and employees perpetrated a fraudulent scheme by selling clients advertising inventory the company did not have and then under-delivering on its advertising campaigns.

Despite these under-deliveries, the company allegedly still invoiced its clients as if it had delivered in full.

To conceal the under-deliveries, the former executives and employees allegedly falsified affidavits and proofs of performance to make it appear the company was delivering advertising content to the number of screens in its clients’ contracts, and also inflated patient engagement metrics regarding how frequently patients engaged with Outcome’s tablets.

Furthermore, Desai allegedly altered a number of studies presented to clients to make it appear that the campaigns were more effective than they actually were.

Outcome not only overcharged clients, it also overstated its revenue for 2015 and 2016, according to the charges.

“The deception alleged to have been committed by the defendants tricked clients into paying for advertising it failed to deliver and served to falsely inflate the value of Outcome Health,” Assistant U.S. Attorney Brian Hayes, chief of the Criminal Division for the Northern District of Illinois, said in a statement.

According to a report by CourtHouse News, federal prosecutors repeated those accusations in their opening arguments on Monday, following a full week of jury selection.

“This trial is about ambition, greed and fraud… it’s about lies to get money, and what it took to hide those lies,” Justice Department attorney Kyle Hankey told the jury. “They sold advertising inventory that they didn’t have to their clients. They billed their clients for advertising they didn’t deliver.”

The prosecutor painted Shah and Agarwal as greedy tech entrepreneurs whose ambitions outstripped their ability to deliver on Outcome’s promised services. He alleged that the pair had lied “from the outset,” overstating how many offices in which their company could feasibly place advertisements.

“They oversold advertising inventory to their client… It told its clients that it had more offices than it really had,” Hankey said.

Hankey concluded his opening arguments by claiming that the trio of defendants regularly fired employees who caught on to Outcome’s alleged fraud scheme, including one accountant who was only with the company for two weeks before being shown the door. That accountant is scheduled to testify during the trial.

In the trio’s own opening arguments, Shah’s attorney John Hueston, of the California law firm Hueston Hennigan, did not contest that some fraud occurred at Outcome. Instead, he laid blame for the fraud on the 29-year-old Desai.

Unlike Shah, Agarwal and Purdy, Desai pleaded guilty to the two wire fraud charges he faced in December 2019.

Prosecutors painted Desai, who is scheduled to testify as a government witness, as a younger protégé of Shah who followed along with Outcome’s alleged fraud scheme at his mentor’s instruction. Hueston, conversely, accused Desai of carrying out the fraud scheme without the defendants’ knowledge.

The trial is expected to last several weeks before attorneys return for their closing arguments.