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High Court Expands the Reach of the Wire Fraud Statute (Part III)
On May 22, 2025, the Supreme Court endorsed the “fraudulent inducement” theory of wire fraud in Kousisis v. United States, departing from its recent trend of narrowing the scope of broadly worded criminal statutes, including the wire fraud statute. This decision appears to allow the government to obtain a conviction even where the defendant did not intend to cause economic harm to their counterparty, so long as the defendant made material false statements in order to obtain property from another. In future decisions, the Supreme Court will need to harmonize this decision with its other recent wire fraud decisions, as discussed below.
Background
We previously wrote about the Kousisis litigation in December 2024, including the oral argument on December 9, 2024. In Kousisis, Petitioners Kousisis and Alpha Paint and Construction Co, Inc. were awarded two federally-funded contracts from the Pennsylvania Department of Transportation (PennDOT) after submitting the lowest bids. United States v. Kousisis, 82 F.4th 230, 234 (3d Cir. 2023). To comply with the disadvantaged business enterprise (DBE) requirements in these contracts, Petitioners represented that they would engage a DBE-certified paint supplier. Id. This certification was false: the DBE-paint supplier they engaged did not perform any commercially useful function as required. It merely served as a pass-through, giving the false appearance of compliance with the DBE requirement. Id. at 235.
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