The Pennsylvania Department of Transportation awarded two bridge-painting contracts to Stamatios Kousisis and the industrial-painting company he helped manage. The contract required that a certified “disadvantaged business enterprise” supply the materials. Kousisis and his company represented that it would acquire supplies from Markias, Inc., a prequalified disadvantaged business.
In reality, Markias was a pass-through entity, allowing Kousisis’s non-qualified suppliers to supply paint; Kousisis submitted false paperwork to conceal the arrangement. A jury convicted Kousisis and his company of wire fraud and conspiracy. He appealed, arguing that there was no fraud since his company had performed on the contract as required and did not try to cause, or actually cause, any economic loss. The Third Circuit affirmed.
The Supreme Court also affirmed, holding that a defendant who induces a victim to enter a transaction under materially false pretenses may be convicted of wire fraud even if he did not seek to cause economic loss. In doing so, the Court recognized the fraudulent-inducement theory of fraud. 18 U.S.C. § 1343 requires only a scheme to obtain “money or property” by deception; it does not impose an additional economic-loss requirement, as Kousisis argued.
Justice Thomas wrote separately to emphasize that whether the defendant makes a materially false statement remains an essential element of federal wire fraud, though the Court did not decide which standard applies. In his concurrence, Gorsuch criticized footnote 5 of the majority opinion for appearing “to spurn fraud’s historic injury rule,” warning that the federal wire-fraud statute may become a weapon for punishing victimless crimes. Justice Sotomayor agreed with the outcome as well, but under a narrower view of fraudulent inducement.
Certiorari to the Third Circuit
Opinion by Barrett, joined by Roberts, Thomas, Alito, Kagan, Kavanaugh, and Jackson
Opinion concurring by Thomas
Opinion concurring in part and concurring in the judgment by Gorsuch
Opinion concurring in the judgment by Sotomayor
Click here to read the opinion.