Supreme Court Decides Kousisis et al. v. United States

On May 22, 2025, the U.S. Supreme Court decided Kousisis et al. v. United States, holding that a defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of conspiracy and federal fraud under 18 U.S.C. §§ 1343 & 1349 even if the defendant did not seek to cause the victim economic loss.

Stamatios Kousisis and Alpha Painting and Construction Co. had obtained two contracts for painting projects in Philadelphia from the Pennsylvania Department of Transportation (PennDOT). Awardees of such contracts must, per federal and state regulations, subcontract a portion to a disadvantaged business. The role of the disadvantaged business must not be perfunctory; it must perform a “commercially useful function.” 49 CFR § 26.55(c). But Kousisis lied during the bidding process. He falsely represented that Alpha would obtain its paint supplies from Markias, Inc., a prequalified disadvantaged business. However, Kousisis had arranged for Markias to function as a mere “pass-through” entity — its only role was funneling checks and invoices to and from Alpha’s actual suppliers and taking a fractional markup on the paint others supplied. This contradicted Kousisis’s representations and violated the requirement that disadvantaged businesses perform a commercially useful function.

A grand jury indicted Alpha and Kousisis for wire fraud and conspiracy to commit the same under 18 U.S.C. §§ 1343 & 1349, on the theory that they had induced PennDOT to award them the painting contracts under materially false pretenses. After a jury found them guilty of three counts of wire fraud and one count of conspiracy, they moved for acquittal, arguing that the Government could not prove that they had schemed to defraud PennDOT of “money or property” as § 1343 requires. The district court rejected their argument, and the Third Circuit affirmed the convictions. Both the district court and the Third Circuit concluded that the Government had established a scheme to defraud PennDOT of “money or property” as the federal wire fraud statute requires because obtaining the Government’s money or property was precisely the object of Alpha and Kousisis’s fraudulent scheme: Alpha and Kousisis “set out to obtain millions of dollars that they would not have received but for their fraudulent misrepresentations.”

The Supreme Court affirmed, reasoning that the Government’s fraudulent-inducement theory is consistent with both the text of § 1343 and its precedent, particularly because the text of § 1343 does not mention economic loss, let alone require it. Moreover, Alpha and Kousisis’s conduct satisfied each element of § 1343. They devised a scheme to obtain money from PennDOT through false representations about their compliance with the disadvantaged-business requirement. Even if the defendant provides something of value in return, a scheme may still constitute wire fraud. The Court further noted that the fraudulent-inducement theory is inapplicable to schemes targeting some kind of intangible interest, such as a citizen’s interest in “impartial government.”

Prior to this decision, the federal circuits were divided over the validity of a federal fraud conviction when the defendant did not seek to cause the victim net pecuniary loss.

Justice Barrett delivered the opinion of the Court, in which Chief Justice Roberts, Justices Thomas, Alito, Kagan, Kavanaugh, and Jackson joined. Justice Gorsuch filed an opinion concurring in part and concurring in the judgment, and Justice Sotomayor filed an opinion concurring in the judgment.