The first person charged in the ongoing fraud investigation into Outcome Health pleaded guilty today in federal court.
Ashik Desai, who was in charge of business development at the healthcare advertising company, pleaded guilty to one count of wire fraud this morning before U.S. District Judge Thomas Durkin. Desai faces up to 10 years in prison as part of the plea agreement, prosecutors said.
Desai, 26, admitted to being at the center of a fraud scheme in which Outcome overcharged pharmaceutical companies for advertising in doctors' offices they didn't receive by falsifying internal reports and data sent to clients.
Desai is one of a half-dozen former employees of Outcome who have been charged in connection with what federal prosecutors and the Securities & Exchange Commission say was a fraud scheme that deceived investors and lenders who gave the Chicago company nearly $1 billion.
Outcome built a network of TV screens in doctors' offices and tablet computers in exam rooms and charged pharmaceutical companies for advertising on them. But prosecutors claim Outcome charged advertisers for more screens than it actually had, and inflated the amount of additional prescriptions that resulted.
Desai is cooperating with prosecutors, who said he is expected to testify against his former employers, including co-founders Rishi Shah and Shradha Agarwal, and former chief financial officer Brad Purdy, who have been indicted on multiple counts of wire fraud.
Purdy is due to be arraigned later today.
Two other former Outcome employees, analysts Kathryn Choi and Oliver Han, have pleaded not guilty to conspiracy to commit wire fraud but are cooperating with the government, prosecutors said during Desai's hearing today.
Flanked by his attorneys, Desai, who joined Outcome as an intern when he was a 19-year-old student at Northwestern University, said Outcome used procedures that "were wrong, that included selling inventory that wasn't there and falsely inflating data. . . .I personally hid (the fraud) by changing key numbers in reports."
Desai was placed on leave from Outcome two years ago when the Wall Street Journal raised questions about whether the company knowingly overbilled advertisers.
Desai, who came to Northwestern to study medicine but switched to economics, is finishing his MBA at University of Pennsylvania's Wharton School of Business.
But prosecutors made clear in court today they expect for Desai to do time in federal prison. He faces a maximum of 20 years, but prosecutors say they won't ask for more than 10 years.
He won't be sentenced until the cases against his former colleagues are decided.
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This article was originally published in Crain's Chicago Business.
