Outcome Health trial: Former lawyer describes whistleblower worries

“I started looking for a new job because of what was being said in these exit interviews. I was not comfortable,” Williams said of his decision less than a year after joining the company. But it was a follow-up letter from a whistleblower in sales that provided the “WTF moment for me,” he said.

He was originally skeptical of the accusation that the company was selling inventory it didn’t have because the employee had filed whistleblower complaints at two previous companies.

Selling inventory and hiding it from customers is at the center of the fraud case against Outcome Health co-founders Rishi Shah and Shradha Agarwal, and former chief financial officer Brad Purdy, who are on trial in federal court.

Williams said the whistleblower’s detailed claims of pervasive deception of customers beyond the initial example made him recommend that the company hire an outside law firm to investigate the claims and set up a compliance program.

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If the claims were true, that Outcome had been under-delivering advertising to clients for nearly a decade, Williams worried that the liability would undermine the company’s plans to go public.

“If you haven’t performed contractual obligations, that’s going to be a problem in due diligence,” Williams told jurors. “These are the types of things that will come out that will completely blow up a sale, an IPO or a fundraise.”

Unbeknownst to Williams as he left the company in early 2017, Outcome was raising nearly a half-billion dollars from a high-profile investment group that included Goldman Sachs, Google and Illinois Gov. J.B. Pritzker’s former venture capital fund.

Williams said he didn’t tell Shah, Agarwal or Purdy that fraud was why he was leaving to join an e-commerce startup. “I didn’t tell them why,” he testified. “I told them I was leaving to pursue something I was passionate about. I just wanted to leave. I didn’t want to create any more friction. I didn’t care at that point. I just wanted to leave. I chose the path of least resistance.”

The fraud allegations became public about nine months after Williams left. Investors sued Shah and Agarwal not long afterward to recover their money.  

This story first appeared in Crain’s Chicago Business.