A former senior analyst at Outcome Health will avoid prison time after a federal judge sentenced her Tuesday to three years of probation and 200 hours of community service for her role in what prosecutors have called a $1 billion fraud scheme at the once successful Chicago company.
Kathryn Choi is the fifth former Outcome employee or leader to be sentenced in recent months. Choi pleaded guilty in 2020 to one count of conspiracy to commit wire fraud as part of a plea deal, and she cooperated with the government’s investigation into Outcome executives.
The U.S. Probation Office and Choi had asked that she be sentenced only to probation.
Outcome sold advertising to pharmaceutical companies, and ran those ads on TVs and tablets that Outcome installed in doctors’ offices and waiting rooms. But Outcome executives 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. The executives also inflated revenue figures used to raise money from investors and secure loans, prosecutors alleged during a trial of the company’s former top three executives last year.
At the end of that trial, a jury found those three executives guilty of fraud. This summer, former Outcome co-founder and CEO Rishi Shah was sentenced to 7 ½ years in prison, former co-founder and president Shradha Agarwal was sentenced to three years of confinement in a halfway house, and former chief operating officer and chief financial Brad Purdy was sentenced to 27 months in prison.
In September, a fourth former executive, Ashik Desai, was sentenced to seven months in prison. Desai took a plea deal with the government early on and testified against his bosses during the trial.
Desai was Choi’s boss, and Choi fabricated inventory and production numbers under Desai’s direction, the government wrote in its sentencing memo. The government noted in that memo that other Outcome employees resigned when they learned about the fraud, but Choi remained in her job and “acquiesced to her role in the scheme because she valued her employment with Outcome and the career and financial opportunities it presented, and likely due to her trust in and deference to others in the company.”
The government also said, however, that she had no contact with the higher-level participants in the fraud scheme and did not benefit financially beyond her salary.
An attorney for Choi wrote in a sentencing memo that she “was charged in this case because she worked hard to please her boss, implement his directions, and follow practices and procedures that were in place at her employer, Outcome Health, long before she was hired. Over time, she came to understand that some of those directions and practices were fraudulent. She stands before the Court because she chose to believe the rationalizations offered by her boss and to continue to do his bidding, rather than to quit a job that appeared to be an exciting opportunity for a young college graduate.”
According to the memo, Choi has since “done everything right, and everything possible to make things right,” including cooperating with the government’s investigation, accepting responsibility for her conduct, rebuilding her career and learning lessons from her mistakes.
A second former analyst, Oliver Han, who also previously pleaded guilty to one count of conspiracy to commit wire fraud, is scheduled to be sentenced Wednesday.
