Sullivan & Cromwell Discusses Supreme Court’s Broad Interpretation of Federal Wire Fraud Statute

In a notable decision issued on May 22, 2025, Kousisis v. United States, the U.S. Supreme Court held that a defendant may be convicted of wire fraud under 18 U.S.C. § 1343 even when the scheme does not result in any economic loss and the alleged perpetrator provides bargained-for goods or services to the victim. The case arose from the criminal convictions of Stamatios Kousisis and his company, Alpha Painting & Construction Co., which received more than $20 million in highway painting contracts from the Pennsylvania Department of Transportation based on false representations concerning compliance with federal rules requiring the use of disadvantaged business subcontractors. The Supreme Court upheld their convictions for wire fraud, even though Alpha ultimately completed all required work under the contract and the agency suffered no pecuniary harm. The decision departs from a recent trend in which the Supreme Court has reversed federal convictions and rejected prosecutors’ expansive interpretations of federal fraud statutes.

The federal wire fraud statute prohibits the use of interstate wires in furtherance of schemes to obtain money or property by means of materially “false or fraudulent pretenses, representations, or promises.” 18 U.S.C. § 1343. The Supreme Court has acknowledged that this language is “undeniably broad” but has stressed in recent decisions that it only reaches “schemes that target traditional money or property interests.”[1]

In recent years, the Supreme Court has reversed several criminal convictions for fraud and public corruption offenses, rejecting prosecutors’ expansive readings of federal fraud statutes in favor of narrower interpretations. These include:

• Cleveland United States, 5531 U. S. 12(2000): holding, in a case involving false statements to a state regulator in an application for a poker license, that the state’s authority over the issuance, renewal, and revocation of such licenses does not constitute “property” under federal fraud statutes.
• Kelly United States, 5590 U. S. 391(2020): reversing the convictions of former New Jersey officials who engaged in alleged political retribution by closing lanes on a toll bridge on the basis that federal fraud statutes only cover “schemes to defraud” in which the aim is to deprive victims of money or property.
• Ciminelli United States, 5598 U. S. 306(2023): holding, in a case relating to an alleged influence-peddling scheme by associates of the Governor of New York, that the “right to control theory” of wire fraud—i.e. that potentially valuable economic information necessary to make discretionary economic decisions constituted “property” under federal fraud statutes—is invalid.

Kousisis v. United States arose from federally-funded infrastructure contracts awarded by the Pennsylvania Department of Transportation (PennDOT). Because those projects received substantial federal grants from the U.S. Department of Transportation (DOT), PennDOT was obligated to comply with federal regulations that require contractors to subcontract a percentage of the total contract amount to DBEs—defined as small businesses controlled by individuals who are both socially and economically disadvantaged. The regulations require that DBEs substantively participate in the actual fulfillment of contracts.[2]

As part of the bidding process for painting contracts, Alpha’s project manager, Kousisis, certified that Alpha would procure approximately $6.4 million worth of paint supplies from Markias, Inc., a certified DBE. In reality, Markias functioned solely as a pass-through entity, performing no substantive work. PennDOT, unaware of the nature of the DBE arrangement, paid Alpha in full upon satisfactory completion of the projects.[3]