Ex-Outcome Health CEO Delays Prison Sentence, Pending Appeal

Rishi Shah

Former Outcome Health CEO Rishi Shah can wait to report for his 7½-year fraud sentence until the Seventh Circuit weighs in on his conviction because the government’s pretrial over-restraint of assets presents a substantial constitutional question for appellate review, a Chicago federal judge said Monday.

U.S. District Judge Thomas Durkin said he granted Shah’s bid for bail pending appeal because deciding whether the government violated Shah’s Sixth Amendment right to counsel of choice by over-restraining millions of dollars it could not properly trace to the fraud allegations turns on an application of the U.S. Supreme Court’s Luis v. United States decision, which could result in either party’s favor.

The Luis decision involved a pretrial motion challenging an order that effectively froze all of the defendant’s assets, according to the judge’s order. Writing for four high court members, Justice Stephen Breyer wrote that the pretrial restraint of legitimate, untainted assets needed to retain counsel of choice constitutes a Sixth Amendment violation. And in a concurrence, Justice Clarence Thomas agreed with that holding, according to the order.

Judge Durkin said he believes he correctly applied the 2016 Luis decision to Shah’s novel circumstances when he rejected Shah’s Sixth Amendment argument in a previous post-trial motion. But “the issue was undoubtedly a close one,” and the Seventh Circuit could find reversal or a new trial is in order if it decides the issue in Shah’s favor, given the precedent controlling the issue, he said.

Representing Shah, Richard Finneran of Bryan Cave Leighton Paisner LLP said in a written statement that he and his client are “deeply gratified that Judge Durkin recognized that the government’s admitted over-restraint of property presents an exceedingly close question that may very well go Mr. Shah’s way on appeal.”

“We are confident that the Court of Appeals will agree and will finally grant Mr. Shah relief for the violation of his Sixth Amendment rights,” the statement continued.

Representatives for the government declined to comment Tuesday. 

A jury convicted Shah and two other former Outcome executives on multiple fraud charges last year for lying about the health advertising company’s capabilities and value to investors, shareholders and pharmaceutical clients. 

He argued after his conviction that he should receive a new trial because the government over-restrained millions of dollars it couldn’t trace back to the alleged fraud, which he could have otherwise used to hire Quinn Emanuel Urquhart & Sullivan LLP as his counsel of choice.

Judge Durkin found that argument untimely after conducting an evidentiary hearing on the matter. He also said Shah would not have been able to afford his counsel of choice, even if the prosecutors had not over-restrained his assets before trial. 

The government argued earlier this month that Judge Durkin’s affordability finding is why Shah’s Sixth Amendment question is merely academic, rather than substantial. The court’s affordability holding was an evidentiary finding that will be “very hard” to overrule, given the appellate review standard it will receive, the government argued. 

Shah is represented by Richard E. Finneran of Bryan Cave Leighton Paisner LLP, and Neal Katyal and William E. Havemann of Hogan Lovells. 

The government is represented by Corey Rubenstein, Jason Yonan and William Hogan Jr. of the U.S. Attorney’s Office for the Northern District of Illinois, and Kyle Hankey of the U.S. Department of Justice’s Criminal Division. 

The case is U.S. v. Desair et al., case number 1:19-cr-00864, in the U.S. District Court for the Northern District of Illinois. 

—Editing by Michael Watanabe and Vaqas Asghar.