The former leader of Outcome Health — who was recently sentenced to 7 ½ years in prison for his role in fraud at the company — will remain out of prison on bail pending his appeal, a federal judge decided Monday.

Former Outcome CEO and co-founder Rishi Shah was supposed to surrender himself Sept. 26 to begin his sentence. But Shah filed a motion in July asking to be granted bail until the resolution of his appeal before the U.S. Court of Appeals for the 7th Circuit.

On Monday, U.S. District Judge Thomas Durkin granted that motion.

In his order, Durkin wrote that Shah is not a flight risk, isn’t appealing as a delay tactic, and that it’s possible the appellate court will reverse or order a new trial.

After Shah and former president and co-founder Shradha Agarwal were convicted of fraud, their attorneys asked for a new trial or dismissal of the indictments against them, arguing that they were unable to hire their first choice of lawyers for the trial because too much of their money was frozen before the trial began. Durkin denied that motion, saying because Shah and Agarwal did not challenge the overly broad restraint of their assets before their trial, they could not do so later. Durkin also wrote at the time that they wouldn’t have had enough liquid assets to afford to hire their preferred attorneys even if fewer of their assets had been frozen before the trial.

In his order Monday, however, Durkin acknowledged that the issue of whether freezing those assets before the trial violated Shah’s Sixth Amendment right to his counsel of choice “was a difficult one” and “that question, if decided another way, is likely to result in reversal or a new trial.”

Shah was sentenced in June after a jury convicted Shah of 19 of 22 counts against him last year.

Shah, who was once a star of Chicago’s technology scene, began the company that ultimately became Outcome while still a student at Northwestern University. The company sold advertising to pharmaceutical companies, and then ran those ads on screens it placed in doctors’ offices and waiting rooms.

Outcome grew quickly, raising nearly $1 billion from high-profile investors and lenders, and at one point employed more than 500 people. Shah owned 80% of Outcome and was named to the Forbes 400 ranking of richest Americans in 2017, with a net worth of $3.6 billion at the age of 31.

The company started to unravel after a 2017 Wall Street Journal exposed the issues at Outcome. Prosecutors ultimately alleged that Shah, Agarwal and a third executive, Brad Purdy, lied about how many doctors’ offices had screens and tablets running their content. Prosecutors said they then used those false numbers to overcharge drug companies for ads, and inflated revenue figures used to raise money from investors and secure loans.

Agarwal and Purdy were also convicted. Agarwal was sentenced to three years of confinement at a halfway house, and Purdy was sentenced to 27 months in prison.

A fourth former Outcome executive, Ashik Desai, is scheduled to be sentenced Thursday. Desai began cooperating with the government at an early stage in its investigation, and he admitted that he took part in the scheme at Outcome, as part of a plea deal with the government. Desai became the prosecution’s star witness at the trial against his former bosses last year.

The government is recommending Desai be sentenced to 60 days in prison, because of his cooperation.

Originally Published: September 16, 2024 at 5:36 p.m.