Rishi Shah and Shradha Agarwal are using a new argument to ask a federal judge to quash their April convictions on federal fraud charges or at least grant them a new trial.
Shah and Agarwal, co-founders of Outcome Health, say that prosecutors seized more of their assets than they should have before the trial, leaving both without enough money to hire lawyers, who is their first choice.
Inappropriate confiscation “means that government misconduct violated Mr. Shah’s right to Fifth Amendment proceedings. Since it was not possible to restore Mr. Shah to his position before violating his constitutional rights, the appropriate remedy is for this Court to dismiss the charges against Mr. Shah,” said Shah’s lawyer. in an affidavit. Friday.
“Conversely, Mr. Shah asked the Court to annul his sentence and order a new trial so that he could assist in his defense by using funds and assets that the government had limited a certain amount of time. illegally for the past three years.”
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Agarwal’s lawyers made the same argument in the filing Friday, which is the deadline for post-trial petitions before sentencing.
Shah, Agarwal and Brad Purdy are the top executives of Outcome Health, which sells television ads and computer monitors installed in doctors’ offices to deliver educational content.
The company took off in 2012 and quickly hit $100 million in sales, becoming one of the most popular startups in Chicago. It has raised more than $300 million from lenders and $488 million from investors such as Goldman Sachs, Google’s parent company, and a venture capital fund set up by Governor JB Pritzker.
But the company allegedly over-billed pharmaceutical customers millions of dollars in advertising dollars they didn’t receive, which inflated the company’s finances, which were used to raise money from lenders and investors. After Shah and Agarwal were indicted in 2019, prosecutors froze about $30 million received by the co-founders in a settlement with investors following allegations of fraud. for Outcome Health.
Among that amount was $10.3 million that Shah and Agarwal spent to hire lawyers to represent them. They tried to free the money, arguing that the money came from investors and lenders who were conned in the scheme in which Shah and Agarwal were indicted. US District Judge Thomas Durkin sided with prosecutors.
Shah spent more than $7 million to hire Quinn Emanuel Urquhart & Sullivan of Washington, DC, headed by William Burck, a white-collar defense attorney who was among the prosecutors who convicted Martha Stewart and Jonathan Bunge. Agarwal spent $3.8 million to hire law firm McGuire Woods.
Burck estimates their defenses combined will cost between $14 million and $15 million.
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“I withdrew from the criminal case because I knew that, by order (of the court), Mr. Shah did not have enough money for Quinn Emanuel to defend him at the end of the criminal case trial,” said Burck. wrote in a statement filed last week. “If the court grants Mr. Shah access to the funds, I understand that he wants to continue with me and Mr. Bunge as his attorney in the criminal case and will hold us because that purpose. In those cases, my colleagues and I would accept representation, but due to Mr. Shah’s inability to raise the necessary funds after issuing the order, we declined representation.”
Eventually, Shah hired Hueston Hennigan, a Los Angeles law firm headed by former Enron prosecutor John Hueston. Agarwal hired the Los Angeles law firms Larson LP and Willkie Farr & Gallagher.
The Shah has been battling forfeiture of his assets, which is usually a straightforward procedure after a conviction. However, he was an active startup investor before receiving a payout of nearly hundreds of millions of dollars when Outcome Health raised money from lenders and investors between 2016 and 2017, and the His attorney argued that millions of dollars in assets frozen by the government had been previously invested and had nothing to do with the crime.
One of the Shah’s lawyers, Bryan Cave Leighton Paisner’s Richard Finneran, who represented him in the foreclosure proceedings, argued that at least $4.8 million in assets, such as accounts startup investments, were improperly frozen and they quickly grew to over $20 million. According to the filing, the inappropriate seizure was discovered in the middle of a 10-week trial.
“At the very least, violations of the Shah’s constitutional rights and federal forfeiture laws require a new trial. But in the unique circumstances of this case, a new trial is not enough,” argued Finneran. “Given the fact that the trial has already taken place and that Mr. Shah has devoted considerable resources to defending his case with a substitute attorney over the course of more than three years, a new trial is not sufficient to ‘restore the case’. [Mr. Shah] to the status quo ante,” which is the appropriate remedy for such a constitutional violation. The result is, “[i]f already has a . . . violation, the indictment will be dropped.” Identification
Shah, Agarwal, and Purdy made other arguments seeking to overturn Durkin’s conviction, mainly arguing that the jury should not have reasonably convicted them based on the evidence.
This story first appeared in Crain’s Chicago Business.
