The United States Supreme Court’s ruling in Kousisis v. United States means a person can be convicted of wire fraud even if they did not intend to cause economic loss. The case arose from a Philadelphia-area painting company that was awarded PennDOT government contracts that required a percentage of the work be awarded to Disadvantaged Business Enterprises (DBEs) after falsely claiming a DBE would supply the paint materials.

Key Takeaways:

• In Kousisis v. United States, the US Supreme Court ruled 9-0 that wire fraud does not require proof that the victim suffered actual economic loss, only that the defendant’s misstatement was material to the victim’s decision to enter into the transaction.
• The case arose from bids for PennDOT painting contracts in which the defendant falsely misrepresented that he would use DBE’s as a paint supplier.
• The ruling resolves a split among federal appeals courts and holds that a defendant can be convicted of fraudulent inducement even when they did not intend to cause monetary loss.
• The decision focused on the issue of materiality and determined that a material misrepresentation is one that actually influenced the government’s decision to award the contract.
• Any company that does business with a government entity and certifies compliance with contracting terms now faces greater legal exposure under this ruling.

What Kousisis v. United States Decided About Wire Fraud

Mr. Kousisis was charged with and convicted of wire fraud under 18 U.S.C. §§ 1343 and 1349. Defendant Kousisis and his company, Alpha Painting and Construction Co., were awarded painting contracts by the Pennsylvania Department of Transportation (PennDOT). The contracts required that a certain percentage of contracts be awarded to DBEs. Mr. Kousisis falsely claimed that his company would use a DBE subcontractor to supply the paint, but instead used a pass-through DBE that did not exist. PennDOT awarded the contract to Mr. Kousisis’s company, Alpha Painting, which completed the project and fulfilled all other terms to PennDOT’s satisfaction, earning over $20 million. The Third Circuit Court of Appeals affirmed the conviction, rejecting defendants’ argument that a conviction required that the victim suffer economic loss. The matter was appealed to the United States Supreme Court.

In Kousisis v. United States (2025), the Supreme Court unanimously upheld the “fraudulent inducement” theory of wire fraud. Under that theory, a defendant who uses a material misrepresentation to induce someone to enter a transaction has committed fraud even if the defendant never intended to cause the victim economic loss and the victim suffered none. Kousisis’s company won Pennsylvania Department of Transportation painting contracts by falsely representing that a certified disadvantaged business enterprise (DBE) would supply materials, which satisfied a federal DBE participation requirement. He argued there was no fraud because PennDOT received exactly the work it paid for, at the agreed price. Justice Barrett’s opinion rejected that argument. The wire fraud statute requires only a scheme to obtain money or property through material deception, not proof of net economic harm. The limiting principles are materiality and the requirement that money or property be the object of the scheme, not loss. The decision did not eliminate intent altogether, since prosecutors must still prove intent to deceive.

How Kousisis Changes the Wire Fraud Statute for Federal Contractors

The decision resolves a split among federal courts of appeals and holds that a defendant can be convicted of fraudulent inducement even when they did not intend to cause monetary loss. The opinion focused on whether the defendant’s misrepresentations were material (whether they would have affected the victim’s decision to engage in the transaction in the first place), ultimately finding that prosecutors no longer need to prove the victim suffered monetary loss to secure a wire fraud conviction.

Why Not Every False Statement Is Fraud: The Materiality Defense After Kousisis

The Court’s decision turned on the issue of materiality: whether the defendant’s false statement affected the victim’s decision to enter into the transaction. The Court reaffirmed the three-factor test for materiality:

• Whether the misstatement induced the decision;
• Whether a reasonable official would consider it important; and
• Whether the defendant knew it mattered to the decision-maker.

Following Kousisis, many government contracts now include language declaring that compliance with certain requirements, such as anti-discrimination provisions, is “material” to payment decisions. Nonetheless, truly trivial misstatements, such as an immaterial paperwork error, should not support a wire fraud conviction.

How Kousisis Puts Government Contractors and DEI Certifications at Risk

For federal contractors, the implications are significant. False certifications and representations made to win or keep a contract can now support criminal wire fraud charges even where the government got full value. Examples include small business, DBE, or veteran-owned companies, domestic-sourcing or Buy American compliance, cybersecurity requirements, labor standards, DEI certifications and other eligibility conditions. “No harm, no foul” is no longer a defense. The government’s exposure theory now tracks the materiality analysis familiar from False Claims Act (FCA) cases like Escobar, which increases the overlap between civil FCA liability and criminal prosecution. As a result, the accuracy of every certification in bids, registrations, and invoices carries heightened stakes. Robust compliance review, documentation of the basis for each representation, and prompt correction and disclosure of errors are now more important than ever.

The Court’s ruling in Kousisis removes the requirement that the prosecution prove a defendant intended to cause monetary loss and raises the stakes for anyone who signs a compliance certification in a bid on a government contract.

Philadelphia federal criminal defense attorney Hope Lefeber has been defending clients charged with fraud and other white-collar crimes for more than three decades. She began her career as an enforcement attorney with the United States Securities and Exchange Commission (SEC), where she learned firsthand how the government prepares and prosecutes fraud cases. Today, she uses that experience to defend individuals who are under investigation or charged with federal fraud. Contact the Law Offices of Hope Lefeber to schedule a confidential consultation.