Prosecutors finished presenting their case against three former executives of Outcome Health, eight weeks after the fraud trial began.
The final witnesses were a forensic accountant and a partner from Google’s venture-capital fund, Capital G, which saw its $50 million investment evaporate after fraud accusations grounded the once-high-flying Chicago startup more than five years ago.
Related: Outcome Health investor lost 90% when company fell
Outcome Health built a network of TV and computer screens in doctors’ offices and charged pharmaceutical companies millions of dollars to advertise on them. Co-founders Rishi Shah and Shradha Agarwal and former Chief Operating Officer Brad Purdy are accused of selling inventory the company didn’t have, overbilling pharmaceutical customers, which inflated Outcome Health’s financial results that were used to raise nearly $1 billion in loans and investment from Google’s Capital G and other investors.
It’s not clear how much of a case the defense teams plan to mount when the trial resumes next week. Attorneys for Shah and Agarwal said they’ll decide this weekend if their clients will testify. Purdy’s attorneys indicated it’s unlikely he’ll take the stand.
If they decide not to testify, closing arguments could come as soon as Tuesday, with the case going to the jury by the end of the week. If that happens, a trial that originally was expected to last 14 weeks could go to the jury after just nine.
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Already the defense teams have decided not to call experts in accounting and the world of fast-growing startups that they had planned before the trial.
The government has the burden of proving that Shah, Agarwal and Purdy are guilty of fraud, knowingly deceiving customers and investors for personal gain. It’s very common for defendants not to put on a case, says Renato Mariotti, a former federal prosecutor who now is a partner at Bryan Cave Leighton Paisner.
“When considering whether to put on a defense case, and how extensive of a defense case to put on, defense counsel focus on the strength of the government’s case,” Mariotti said. “If the government case is very weak, an argument can be made to put on no defense case at all.
“Ironically, the incentive to put on an extensive defense case is highest when the government’s case is very strong. If a conviction appears almost certain, a ‘Hail Mary’ could be worth a shot.”
Like most white-collar fraud cases, the trial has been long and complex. Witnesses, including several Outcome Health employees, have delved into the minutiae of digital advertising contracts and accounting.
The case has involved more than 1,300 pieces of evidence, ranging from emails and text messages to spreadsheets and voicemails. Both sides have chosen different documents — often different parts of the same lengthy email chains — to provide very different versions of events to jurors.
In just one example, prosecutors highlighted an email from Agarwal to Ashik Desai, an Outcome Health executive who pleaded guilty in the case and agreed to testify, as evidence of intent to commit fraud and hide it from others.
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“Anytime we’re having a back-and-forth discussion on what data to use, let’s take the salesperson off the chain. I’ve noticed their confidence level in our data change dramatically when presenting to clients if they believe it’s accurate vs. made-up.”
The defense, however, highlighted another part of the email in which Agarwal explained why she chose a higher figure from a study than employees had found for a sales presentation.
“I don’t always share backend thinking with (sales) people in how we arrive at a number (same with list matches when we project) but do have a pattern of how I do it.”
Defense attorneys have to decide whether to roll the dice on the belief they’ve created reasonable doubt and the government hasn’t proven its case or on trying to prove their clients are innocent and perhaps letting them testify.
Traditionally, defendants have rarely testified in criminal trials because it opens them up to cross-examination by prosecutors.
“More and more it’s becoming the norm. It used to be a no-no,” says Kevin O’Brien, a former federal prosecutor who does white-collar defense work at Ford O’Brien Landy in New York. “If the case is going badly, why not? You need a Hail Mary. The only way you get that is if the client persuades a juror.”
It didn’t work for Elizabeth Holmes, the founder of health-technology startup Theranos, who took the stand but was convicted of fraud a year ago and sentenced to 11 years in prison. If they are found guilty, Shah, Agarwal and Purdy face up to 30 years in prison.
This story first appeared in Crain’s Chicago Business.
Source : Modern Healthcare