Supreme Court Rules Wire Fraud Prosecutions Can Stand Even In Those Cases In Which The Defendant Did Not Seek To Cause Economic Loss

On May 22, 2025, the Supreme Court issued its opinion inKousisis v. United States, holding that the government need not prove an intent to cause economic loss, let alone actual economic loss, in order to sustain a conviction for wire fraud under 18 U.S.C. ' 1343. The Court's opinion resolves a circuit split about whether a conviction for wire fraud can be sustained "when the defendant did not seek to cause the victim net pecuniary loss."¹

The petitioners inKousisiswere a federal contractor and its manager who were awarded two restoration contracts by the Pennsylvania Department of Transportation.² Because the contracts were largely funded by federal grants, the petitioners were required to commit in their bids to subcontract a percentage of the contract value to a disadvantaged business, defined by Department of Transportation regulations as a "for-profit small business" majority owned by "one or more individuals who are both socially and economically disadvantaged."³ The petitioners represented in their bids that they would comply with this requirement by purchasing painting supplies from a prequalified disadvantaged business.⁴ However, the petitioners bought these goods from another supplier, using the disadvantaged business as a pass-through entity for the purchases.⁵ While the petitioners may have failed to procure the painting supplies from the disadvantaged business they identified, they otherwise successfully completed the restoration work.⁶ Because they were the lowest bidder, the government would have paidmorefor the same restoration work had the work not been awarded to the petitioners.⁷ Nevertheless, both petitioners' convictions were upheld by the Third Circuit.⁸

Writing for the majority, Justice Barrett rejected the petitioners' argument that federal wire fraud convictions required a showing of economic loss.⁹ Justice Barrett explained that the plain text of 18 U.S.C. ' 1343 requires only that the defendant obtained, or devised a scheme to obtain, money or property by false or fraudulent pretenses.¹⁰ This theory of prosecution is referred to as "the fraudulent-inducement theory."¹¹

The fraudulent-inducement theory has been used in a wide variety of cases in which the government has received the good or service for which it contracted but false statements were made by the person receiving payment. While the validity of the fraudulent-inducement theory has been a recurring issue in cases involving alleged disadvantaged business fraud...