Prosecutors said in a filing that they want “to restrain Shah’s assets and thereby prevent him from frittering away the money on gambling, yachts and jets.”
In court filings this week, prosecutors noted that Shah tried to wire $100,000 each on May 23 to accounts at sports-betting sites Barstool Sportsbook and DraftKings, which were rejected. A DraftKings email included in government filings said: “We are returning the bank wire due to these reasons: Negative news and closing account.”
The filings are the latest examples of the contentious battle between Shah and federal prosecutors over his assets, which has been going on for three years.
Now that Shah and fellow Outcome Health executives Shradha Agarwal and Brad Purdy have been convicted of defrauding customers and investors, prosecutors are asking U.S. District Judge Thomas Durkin to allow them to seize Shah’s assets that were frozen before trial.
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The government is looking to forfeit millions in cash and investments belonging to Shah that it says can be traced to the fraud in which the company overbilled pharmaceutical advertisers, inflating the company’s financial results as it raised nearly a half-billion dollars in funding from investors such as Goldman Sachs and Google.
Prosecutors also want authority to garnish other assets that could be necessary to cover restitution they’ll seek when Shah is sentenced in the fall. He's facing up to 30 years in prison.
Shah’s attorneys are fighting prosecutors’ efforts, arguing that the government froze assets that weren’t related to fraudulent activity involved in the case. They also contend that the government can’t seek forfeiture of any assets until final judgment, or sentencing, is complete.
“A criminal defendant has a constitutional right to use assets derived from noncriminal sources to support his defense,” they said in a filing. “The government has denied him that right for more than three years.”
Prosecutors aren’t buying it. “Considering that Shah had access to more than $20 million in unrestrained assets, including more than $11 million in a bank account five months before trial, and considering Shah’s spending habits and high-end lifestyle over the past five years, he cannot credibly claim he needed the non-traceable portion of the restrained assets — which amounted to roughly $4.9 million at the time of indictment — for attorney’s fees.”
This story first appeared in Crain's Chicago Business.
