On May 22, 2025, the Supreme Court published its opinion in Kousisis v. United States, No. 23-909, 605 U.S. __ (2025), holding that one who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even without the intent to cause the victim economic loss. In a unanimous decision, the Court upheld the validity of federal fraud convictions when the defendants delivered the full economic value of the deal. This breaks a trend of recent Supreme Court decisions that have more generally limited the government’s ability to prosecute fraud and corruption cases.
Stamatios Kousisis and the industrial-painting company he helped manage, Alpha Painting and Construction Co., secured two government contracts for the Pennsylvania Department of Transportation (PennDOT). Both contracts required the participation of a disadvantaged business enterprise (DBEs), which Kousisis and Alpha represented they had retained. However, Kousisis and Alpha used the qualifying DBE supplier solely as a pass-through entity and submitted multiple false certifications to cover up their scheme. While Alpha’s work met expectations, its adherence to the DBE requirement did not.
The federal wire fraud statute requires someone to “devise” or “intend to devise” a scheme to “obtain money or property” through “false or fraudulent pretenses, representations, or promises.” Attorneys for Kousisis and Alpha argued that the statute requires a scheme to harm a traditional property interest, and that no such injury occurs if someone gets the full economic value of that bargain. Here, PennDOT received exactly what it wanted and had not contested the quality of the work or the supplied materials. The government argued that the statute does not mention economic loss, and the common law did not establish a general rule requiring economic loss in all fraud cases.
The Court agreed with the government. “The statute does not so much as mention loss, let alone require it. Instead, a defendant violates § 1343 by scheming to ‘obtain’ the victim’s ‘money or property,’ regardless of whether he seeks to leave the victim economically worse off,” wrote Justice Barrett for the Court.
While attorneys for Kousisis and Alpha argued such a holding could threaten to criminalize a broad range of contract work, the Court found that the materiality requirement limited what misrepresentations could be charged as criminal fraud, distinguishing “everyday misstatements from actionable fraud.” Although the parties debated the standard for materiality under § 1343, because Kousisis and Alpha did dispute materality in this case, the Court was content reiterating “‘that materiality of falsehood is an element of’—and thus a limit on—the federal fraud statutes.”
Justice Gorsuch, in an opinion concurring in part and concurring in the judgment, took issue with what he saw as the Court’s apparent “spurn[ing]” of “fraud’s historic injury rule,” suggesting that, under the federal wire fraud statute, “it does not matter if the putative victim receives all he was promised. So long as he parts with any money or property because of the defendant’s misrepresentation.” Justice Gorsuch worried that the Court’s approach risked the prosecution and punishment of “harmless lies.” In a footnote, the Court took issue with Justice Gorsuch’s characterization, explaining that in its view, an “injury” has occurred when the fraudster obtains property by material falsehood that the victim would otherwise not have parted with.
This decision potentially broadens the scope of future fraud prosecutions but its effects may be more limited in cases outside of the context in which it arose—namely, the fraudulent inducement to contract.
McGuireWoods’ government contracting team offers full-service counsel across the federal procurement lifecycle, drawing on deep experience in the Federal Acquisition Regulation and high-stakes contract negotiations. Backed by the firm’s nationally recognized government investigations and white collar litigation practice, we advise clients across diverse sectors—including defense, intelligence, technology, healthcare, and energy—on everything from day-to-day compliance to complex litigation, bid protests, investigations, and regulatory enforcement involving federal agencies and law enforcement. For questions about this holding, or federal fraud generally, contact the authors or your McGuireWoods contact.
The authors thank McGuireWoods summer associate Kelli Pinney for assistance preparing this legal alert. She is not licensed to practice law.