A former executive at Outcome Health – who was the star witness against his bosses in a trial last year – was sentenced to seven months in prison on Thursday for his role in what prosecutors have called a $1 billion fraud at the company.
Before sentencing, former Outcome executive Ashik Desai stood before the judge and apologized for his role in the fraud and pledged to do better.
“What I did was wrong and illegal,” Desai told the court. “There is and was no excuse for my conduct. I will feel shame and remorse about my actions for the rest of my life.”
U.S. District Court Judge Thomas Durkin said during the sentencing hearing that he was impressed with Ashik Desai’s cooperation with the government and felt his remorse was genuine. But he also said he felt Desai and other Outcome leaders were “intoxicated with the prestige” of working for what was once one of the hottest startups in Chicago.
“It’s hard for me to understand, as with all the other co-defendants, how far everyone fell off the path,” Durkin said before sentencing Desai. “All I know is it was so unnecessary.”
Desai’s sentence was far more lenient than those faced by former Outcome co-founder and CEO Rishi Shah, co-founder and former president Shradha Agarwal and former executive Brad Purdy, who were found guilty of fraud last year, following Desai’s testimony. Shah was sentenced in June to seven and a half years in prison, Agarwal to three years of confinement in a halfway house and Purdy to 27 months in prison.
Government prosecutors had asked the judge to sentence Desai to 60 days in prison, while Desai’s attorneys and the U.S. Probation Office had recommended Desai be sentenced to one day of time served and three years of supervised release.
In its heyday, Outcome was one of the most talked about companies in Chicago’s tech scene. Outcome sold advertising to pharmaceutical companies, and ran those ads on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms. At its peak, Outcome, which Shah started while still a student at Northwestern University, had a reported valuation of more than $5 billion and more than 500 employees.
During the trial, however, prosecutors said that Shah, Agarwal and Purdy lied about how many doctors’ offices had screens and tablets running their content and then used those false numbers to overcharge drug companies for ads. Prosecutors said they inflated revenue figures used to raise money from investors and secure loans.
Desai’s sentence on Thursday reflected his cooperation with prosecutors as they went after Shah, Agarwal and Purdy. Desai began cooperating with the government at an early stage in the investigation, and he pleaded guilty in 2019 to one count of wire fraud, as part of a plea deal with the government.
Desai admitted that he altered return-on-investment reports and signed false affidavits given to drug companies stating that their ads ran on more screens than they actually did.
During the trial, defense attorneys for Shah, Agarwal and Purdy described Desai as the mastermind behind the fraud, concealing his actions from his unknowing superiors. They said he was an ambitious, charming wunderkind who lied his way to recognition and success at the company.
Prosecutors, meanwhile, argued that Desai was merely following his bosses’ lead. Desai said during the trial that he once looked up to Shah and Agarwal as an “older brother and older sister.”
Desai, now 31, began working as an intern at Outcome, which was then called Context Media, when he was 19 years old. By his early 20s, he had become the company’s vice president of business growth and analytics and was earning $500,000 a year. He was supposed to go to medical school after graduating from Northwestern University but instead deferred his medical school enrollment, and ultimately gave up his spot in medical school, to work at Outcome.
Prosecutors argued in recent weeks that Desai should not face too harsh a sentence because in addition to cooperating with the government, he was also very young when he committed fraud and did not make millions of dollars from the fraud, like Shah and Agarwal did.
They also noted that he’s worked to move past his mistakes at Outcome. He has another job now with an employer who is aware of his past actions and still supportive of him, prosecutors wrote. As part of his job, he meets with interns to discuss his actions at Outcome and the consequences.
Desai’s attorneys wrote in their sentencing memo: “Ashik intends to formally share his story with business interns and graduates and educate them that the ‘fake it until you make it’ scenario is just a euphemism for fraud and that if faced with a similar situation you must tell the truth, even it means quitting or walking away from a dream job.”
Desai’s attorneys also worked to answer the question, in their sentencing memo, of why Desai didn’t just quit working at Outcome when he discovered the fraud, rather than taking part in it. They cited his youth and inexperience, in addition to a “profound need to please” and a fear of failure.
“Ashik knew it was useless to try to get Shah to abandon the fraudulent practice of selling inventory that Outcome did not have,” Desai’s attorneys wrote. “Ashik convinced himself that if he did not cover up this practice, the fraud would be exposed, and the company would fall apart. Taking his cues from Shah and cloaking himself in the culture of the company, Ashik justified his moral failures by focusing on the future and believing that it would all be okay in the end.”
Before Desai’s sentencing, 58 of Desai’s family members, friends and co-workers also wrote letters to the judge attesting to Desai’s character, in hopes of earning him leniency.
Two other former Outcome employees, Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, also previously pleaded guilty to conspiracy to commit wire fraud. The two are scheduled to be sentenced in October.
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