No Harm, Still Foul: Supreme Court Affirms Expansive Reach of Wire Fraud Statute in Kousisis

In a recent decision upholding the expansive reach of the federal wire fraud statute (18 U.S.C. §1343), the U.S. Supreme Court ruled in Kousisis v. United States, No. 23-909 (May 22, 2025) that a defendant can be convicted of wire fraud even if the victim suffers no net economic loss. The Court’s opinion, authored by Justice Barrett, holds that deception alone — if material and aimed at obtaining money or property — can suffice for a federal wire fraud conviction.

The ruling underscores the broad reach of federal prosecutors under the wire fraud statute and reinforces the importance of strict compliance with representations made during the bidding and negotiation process.

The Facts: A “Pass-Through” Scheme

The case involved two public works contracts awarded by the Pennsylvania Department of Transportation (PennDOT) to Alpha Painting and Construction Co., managed by petitioner Stamatios Kousisis. As a condition of receiving federal funds, PennDOT required a portion of each contract to be subcontracted to a Disadvantaged Business Enterprise (DBE), as defined by federal regulations.

Kousisis represented that Alpha would purchase paint supplies from Markias, Inc., a certified DBE. In reality, Markias served as a pass-through entity: it neither supplied materials nor performed any commercially useful function. Instead, it merely processed invoices and collected a fee, while Alpha sourced materials from non-DBE suppliers.

Notwithstanding the DBE deception, Alpha completed the projects to PennDOT’s satisfaction and earned over $20 million in gross profit. The government charged Kousisis and Alpha with wire fraud and conspiracy, alleging that they fraudulently induced PennDOT to award the contracts under false pretenses.

The Legal Issue: Is Economic Loss Required?

Kousisis argued that because PennDOT received the full value of the services it contracted for, there was no deprivation of “money or property” as required by §1343. The Third Circuit rejected this argument, and the Supreme Court affirmed.

The Court held that the wire fraud statute does not require the government to prove that the victim suffered a net pecuniary loss. Instead, it is enough that the defendant used material misrepresentations to obtain money or property. The Court emphasized that the statutory language — “scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses” — does not mention economic loss, and that common-law fraud historically did not require it in all contexts.

Materiality as a Limiting Principle

To address concerns about overcriminalization, the Court reaffirmed that materiality remains a critical element. Not every lie is actionable — only those that would influence a reasonable person’s decision to enter the transaction. In this case, the DBE requirement was a material term of the contract, and Kousisis’s misrepresentations went to the heart of the government’s decision to award the contracts.

Justice Thomas, concurring, expressed skepticism about whether the DBE provisions were truly material, suggesting that future cases may test the boundaries of this standard. Justice Gorsuch, in a separate concurrence, warned that the Court’s reasoning could open the door to prosecuting “victimless” lies and urged adherence to the traditional “benefit of the bargain” rule.

Implications for White-Collar Defense

Kousisis is a wake-up call for contractors, corporate executives, and their counsel. It confirms that:

• Material misrepresentations alone can support a fraud conviction, even if the government receives full value.
• Compliance with regulatory requirements is not just a contractual issue—it’s a potential criminal liability issue if misrepresented.
• The scope of federal fraud statutes remains broad, and courts are willing to uphold convictions even in the absence of financial harm.

In the post-Kousisis era, the absence of economic loss is not a shield against wire fraud liability.  This decision highlights the importance of scrutinizing representations in government contracting, grant applications, and other regulated transactions.