In a major ruling on the scope of federal fraud law, the U.S. Supreme Court on May 22, 2025, affirmed the conviction of a Pennsylvania contractor who falsely claimed to use a disadvantaged business enterprise (DBE) on federally funded transportation projects. The Court held that economic loss is not required to prove wire fraud if deception was used to obtain money or property.
The case: Kousisis v. United States
Stamatios Kousisis and Alpha Painting & Construction Co. were awarded over $85 million in contracts by PennDOT for work on the Girard Point Bridge and 30th Street Station. As part of the bid, they falsely claimed that a certified DBE, Markias Inc., would supply paint. Instead, Markias acted as a pass-through, forwarding invoices while the actual materials came from other suppliers.
Though the paintwork met expectations, Kousisis’s fraudulent use of a shell DBE violated federal contracting rules. The government charged him with conspiracy and wire fraud, arguing that he obtained funds under false pretenses.
Court rejects economic-loss requirement
In a 7–2 decision, the Court ruled that the wire fraud statute—18 U.S.C. §1343—does not require proof of net economic loss. Writing for the majority, Justice Barrett stated:
“A defendant who induces a victim to enter into a transaction under materially false pretenses may be convicted of federal fraud even if the defendant did not seek to cause the victim economic loss.”
The ruling confirms that inducing a contract through lies—regardless of value received—can qualify as criminal fraud if it deprives the victim of money or property.
Why this matters
The decision resolves a split among federal appellate courts and significantly expands the government’s ability to prosecute fraud in public contracting and beyond. It reinforces that:
- Fraud can be prosecuted even if the victim got services of equal value
- Material misrepresentation—not economic harm—is the key element
- Contractors can be liable if they lie to meet participation requirements
The Court emphasized that the focus is on the deceptive deprivation of property, not whether the government received equal value.
A high-profile example of “fraudulent inducement”
The scheme violated the “commercially useful function” requirement for DBEs, which mandates that certified businesses perform real work—not just act as intermediaries. Markias received $170,000 in markup fees, while Alpha earned over $20 million in profit.
PennDOT believed the work would include legitimate DBE participation, a central element of the contract’s terms. The Court concluded that misrepresenting this point was sufficient for a wire fraud conviction.
Key takeaways
- Fraudulent inducement is a valid basis for federal fraud charges
- Material lies to obtain government contracts can trigger wire fraud
- Proof of economic loss is not required
- The ruling has broad implications for federal contracting, procurement, and compliance
The case is Kousisis v. United States, No. 23–909.
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